BUSINESS BEFORE QUESTIONS

Messages from the Queen

The Vice-Chamberlain of the Household reported to the House, That the humble Address praying that Her Majesty should reappoint Maxwell Marshall Caller CBE to be the chairman of the Local Government Boundary Commission for England with effect from 1 January 2012 for the period ending on 31 December 2015 was presented to Her Majesty, who was graciously pleased to comply with the request.
	The Vice-Chamberlain of the Household reported to the House, That the humble Address praying that Her Majesty should reappoint Maxwell Marshall Caller CBE to be an Electoral Commissioner with effect from 1 January 2012 for the period ending on 31 December 2015 was presented to Her Majesty, who was graciously pleased to comply with the request.
	The Vice-Chamberlain of the Household reported to the House, That the humble Address praying that Her Majesty should appoint Anna Carragher to be an Electoral Commissioner with effect from 1 January 2012 for the period ending on 31 December 2015 was presented to Her Majesty, who was graciously pleased to comply with the request.

ORAL ANSWERS TO QUESTIONS

EDUCATION

The Secretary of State was asked—

Learning Outside the Classroom

Simon Hart: What assessment he has made of the social and economic value to schools and pupils of learning outside the classroom.

Tim Loughton: The Government fully support learning outside the classroom, and whilst we have made no formal assessment, we recognise the important contribution it can make to engaging and supporting pupils in their education. We believe that schools should have the freedom, however, to use their professional judgment to determine how learning outside the classroom best meets the needs of their pupils.

Simon Hart: Will the Minister give an indication of whether his Department will look at allocating a percentage of the pupil premium for this particular area?

Tim Loughton: The whole point of the pupil premium is to give extra resources for schools that can be used exactly as they see fit for their own pupils. If a school wants to use a large or a small part of the pupil premium for that activity, that is entirely a matter for the head and the school.

Catherine McKinnell: Learning outside the classroom includes encouraging healthy eating through breakfast clubs, but new research suggests that one in eight breakfast clubs closed this year and that half of those remaining are under threat. What would the Minister say to the chief executive of
	Greggs, which funds breakfast clubs for 7,000 disadvantaged children across the country, who recently questioned the coalition’s priorities and the fact that it is able to find £250 million to fund weekly bin collections but is unable to pledge support for the rising number of children coming into school hungry?

Tim Loughton: I was in Leeds recently, where I awarded on behalf of the Prime Minister a big society award to the founder of Magic Breakfast, which is a voluntary organisation providing breakfasts and doing some fantastic work—in that case, with a local bagel maker renowned in the city. It is providing fantastic breakfasts for the kids, and I was lucky to see this great job being done rather well. In other places like Liverpool, however, which is run by the Labour party, the decision has been taken to reduce some of the breakfast clubs. That is a matter for local authorities; other places are doing it well, and the hon. Lady should look at some of these innovative schemes rather than look to the Government to provide everything.

Pupil Premium (Harlow)

Robert Halfon: How much he plans to allocate in funding for the pupil premium to (a) Harlow constituency and (b) England in 2011-12.

Sarah Teather: We are planning to allocate £625 million to schools and local authorities in England in 2011-12. The allocation for the Harlow constituency is £1,012,112.

Robert Halfon: I thank my hon. Friend for that excellent news about how the pupil premium is helping the most vulnerable children in my constituency. Will she look at incentivising schools like Burnt Mill in Harlow that are using the pupil premium to focus on improving maths and English?

Sarah Teather: I am delighted to hear about that school using the pupil premium in that way. It is good to hear from head teachers examples of how they are spending the money and the impact it is making on the ground. I wonder whether the hon. Gentleman would invite the head teacher to write to me to tell me more about the detail of the work that that school is doing and its impact on pupils, as we are looking to try to publicise examples of good practice and it would be helpful to hear what is happening in the hon. Gentleman’s constituency?

Chris Ruane: Although the pupil premium has some merits in theory, what we shall see in reality over the next few years is the biggest cut in education funding since the 1950s. Is this not simply a case of robbing Peter to pay Paul?

Sarah Teather: I am glad to hear some grudging acceptance from the Opposition of the benefits of the pupil premium, which focuses money on the most disadvantaged students and gives schools freedom to spend it as they choose. I have just heard an example from my hon. Friend the Member for Harlow (Robert Halfon) of where that is making a substantial difference.
	I remind the hon. Gentleman that there is a flat cash settlement per pupil, and that an additional £2.5 billion has been made available for the pupil premium.

Amber Rudd: Schools in my constituency are to receive a welcome £1.5 million from the pupil premium. At a meeting with representatives of the local primary school last Friday, I learnt that some primary schools will be working together to spend that money in the best possible way for their pupils. Does the Minister agree that that is a smart way of trying to get the best out of the pupil premium?

Sarah Teather: Trying to encourage smaller schools in particular to work together on best practice, especially if they have similar catchment areas, is an excellent initiative. It is helpful to hear about what is happening on the ground.

Trends in Education and Schools Spending

Simon Danczuk: What assessment he has made of the findings of the report by the Institute for Fiscal Studies on Trends in Education and Schools Spending.

John Woodcock: What assessment he has made of the findings of the report by the Institute for Fiscal Studies on Trends in Education and Schools Spending.

Gareth Thomas: What assessment he has made of the findings of the report by the Institute for Fiscal Studies on Trends in Education and School Spending.

Michael Gove: I read the IFS report with interest, and found its arguments thought-provoking.

Simon Danczuk: The report shows that education spending is being reduced dramatically. Head teachers in Rochdale and throughout the country deserve our praise for their hard work in dealing with the cuts that are being made by the Government of whom the Secretary of State is a member. Will he take this opportunity to apologise for describing head teachers as whingers?

Michael Gove: I am grateful to the hon. Gentleman for praising head teachers in Rochdale. Head teachers everywhere are doing a fantastic job with limited resources. The one thing that I hope I shall be able to work with the hon. Gentleman to ensure is that head teachers can make those resources go even further by allowing their schools to convert to academy status.

John Woodcock: The report shows that capital spending on schools was the fastest-growing component under Labour, but that we shall see the biggest cut under the Secretary of State’s plans. In Barrow, a vital development is currently being upheld at the planning stage by Conservative councillors. Will the Secretary of State guarantee full funding for the project if those planning objections are dismissed?

Michael Gove: I think that the hon. Gentleman probably means “held up” rather than “upheld”. However, we shall do everything possible to ensure that not just the planning system but building regulations are reformed so that necessary investment in schools is accelerated, and we shall do everything possible to ensure that resources are there for those in the most need.

Gareth Thomas: In the light of the IFS report and the understandable concerns that it will have raised among my constituents who have children at school, can the Secretary of State assure Harrow schools that have just become academies that there will have been no real-terms cut in direct Government spending by the time of the next election?

Michael Gove: All schools that have become academies have the chance to spend their money directly on the priorities that are close to them. Obviously every school will have different funding results over the next four years, but, overall, cash spending on schools is protected, and schools should also benefit from the pupil premium.

Philip Hollobone: The IFS report sets education spending in the context of the national economy as a whole. Will the Secretary of State remind the House of the comparator between the size of the education budget each year and the size of the net annual debt interest bill left to this country by the Labour party?

Michael Gove: My hon. Friend has made another welcome point. The truth is that any reductions in spending across government are a direct result of the mismanagement of the last Government and the economic mess that they bequeathed to us.

Stephen Twigg: The IFS report shows that the Secretary of State is undertaking the largest cut in education spending since the 1950s, and that education capital will be cut by an eye-watering 57%. Can he tell us how that 57% cut compares to the average capital spending cut across all other Departments?

Michael Gove: I am reminded by my hon. Friend the Minister of State with responsibility for children and families that it should be “compares with”, not “compares to.” The truth is that under the last Government capital spending was poorly allocated and wastefully squandered, and we are now ensuring that money goes in particular to those primary schools in desperate need that were neglected when the hon. Gentleman, unfortunately, was not in government but so many of his colleagues were.

Stephen Twigg: The right hon. Gentleman’s English may be better than mine, but his maths certainly is not, because, as he knows, the cut is double the average cut—a truly terrible spending settlement for education capital. With youth unemployment now over 1 million, will he join me in pressing the Treasury to bring forward capital investment in schools, as set out in Labour’s plan for jobs? Does he agree that that would not only be good for education, but it would be good for jobs and economic growth?

Michael Gove: The hon. Gentleman is, indeed, very good at arithmetic; if only he had been in the Treasury over the last five years when so much money was wasted by a spendthrift and profligate team of Ministers who had not a care for prudence, economy or the next generation. If he believes in a plan for jobs and growth, he should support the deregulation measures that will be in the autumn statement; he should support the Chancellor in making sure our economy is competitive again, and he should support the education reforms we are introducing, which will ensure that our children go on to become the best educated and the most enterprising in the world.

Pupil Premium

Rushanara Ali: What estimate he has made of the change in average expenditure on schools in real terms per student following the introduction of the pupil premium.

Sarah Teather: Average funding per pupil for 2011-12 has been kept cash-flat at £5,082 per pupil, plus the pupil premium. The pupil premium totals £625 million this year, rising to £2.5 billion in 2014-15. It provides £488 for each free-school-meal child and looked-after child. In addition, the children of families in the armed services will attract £200.

Rushanara Ali: I thank the Minister for her answer. According to recent research, a London child living in one of the country’s most deprived neighbourhoods in 2010 had a 75% chance of finishing above the bottom quarter of the national results at age 16. Without the London weighting attached to the pupil premium, how will the Government ensure these high standards are maintained in constituencies such as mine?

Sarah Teather: I absolutely agree that the figures for attainment for children on free school meals and looked-after children are woefully inadequate at present. That is why we have introduced the pupil premium. I should also say that in the hon. Lady’s constituency per-pupil funding is higher than almost anywhere else in the country. A substantial amount of money is already going into her constituency, therefore, as well as a significant amount of money through the pupil premium, which will rise to £2.5 billion nationally by the end of the spending review period. I would therefore encourage her to ask her schools how they are spending that money, and I would be very pleased to hear the detail of some of the best practice being followed by them.

Dan Rogerson: My hon. Friend rightly sets out the benefits of the pupil premium. Does she agree that one of them is that it targets disadvantaged pupils wherever they are in the country, unlike general funding formulas, which the Government are looking at and which under previous Administrations have, perhaps, neglected some children in some parts of the country?

Sarah Teather: Absolutely. I represent an inner-London constituency so I see very high levels of deprivation there, but there are also high levels of deprivation in rural areas, which is often unseen either because it is in
	pockets or because people might perceive that because an area is leafier it must also be wealthier. Many rural schools, including in my hon. Friend’s constituency, will benefit from the pupil premium and will be able to focus their efforts on raising the attainment of all their pupils.

David Blunkett: I have written to the Minister’s colleague the Secretary of State about a specific issue relating to transient populations clustered in particular areas, such as north-east Sheffield, where as many as 25% of primary school pupils and about 15% in one secondary school do not claim the usual benefits that entitle their school to receive the pupil premium. I therefore take the unusual step of asking the Minister to come to Sheffield and to my constituency, so as to examine this issue and then reformulate the pupil premium so that such schools can be supported and helped?

Sarah Teather: Obviously, I have not seen the right hon. Gentleman’s letter to the Secretary of State, but I would be happy for either me or a colleague to come to see the specific issues in his constituency. I recognise the challenges of having a transient population and ensuring that all those families are claiming their benefits and are registered for free school meals. The Department is beginning a series of work to encourage schools to make sure that all families are signed up to free school meals.

Andrew Bridgen: I very much welcome the introduction of the pupil premium, but is the whole system not completely reliant on the schools correctly identifying and registering pupils who are eligible for free school meals? How successful does the Minister believe schools are in identifying these vulnerable pupils?

Sarah Teather: It varies according to area. We know that there is some tail-off at secondary school level, which is one of the reasons why our funding consultation touched on whether or not to introduce measures, including “ever” free school meals. That was about picking up children for the pupil premium who had previously been on free school meals, because there is some drop-off as they move from one area to the next. As I said, we are beginning some work to encourage parents to sign up. Not all parents want to sign up for the lunch, but they may well be keen to sign up if they know that their school will get extra money.

Kevin Brennan: The facts are that the Institute for Fiscal Studies report says that in this financial year nearly three quarters of primary schools and more than 90% of secondary schools will see a real-terms cut in their budgets, even after including this so-called “additional pupil premium”. Is the Minister embarrassed about the way she has been conned by her coalition partners or was she only too willing to sell our schools short?

Sarah Teather: Perhaps I can quote the IFS report back at the hon. Gentleman, because it says that the most deprived schools are likely to see real-terms increases in funding per pupil in 2011-2012. It is perhaps sometimes worth reading the detail of a report and not merely quoting back headlines.

Broadband Access

Helen Goodman: What assessment he has made of the effect on schoolchildren of a lack of high-speed broadband access in schools.

Nick Gibb: Broadband is important in supporting teaching in schools. The Department for Education does not collect data on broadband speeds in schools, but evidence suggests that almost all schools in England have access to broadband—speeds will vary, depending on location. Most schools choose broadband provided by local authorities or regional broadband consortiums, which are able to aggregate demand across a region, take account of rural schools and offer services suited to the needs of education.

Helen Goodman: I am grateful for that answer. In Byers Green and Binchester in my constituency there are broadband not-spots—they are surrounded by areas that are well served—and so children are told to do homework, using broadband, that they simply cannot do. Will the Minister either lobby his colleagues to ensure that broadband is accessible throughout the country or take steps to make sure that secondary schools stop requiring children to do homework that they simply cannot do?

Nick Gibb: I am grateful for the hon. Lady’s comments. A BECTA survey in 2009 showed that only 2% of primary schools and 1% of secondary schools regarded their broadband speeds as very slow. There is record spending on broadband at the moment and the Government have allocated £530 million over the Parliament for broadband, which is available to local authorities to help improve broadband in their areas.

Careers Guidance

Gordon Henderson: If he will bring forward proposals to place schools under a statutory duty to provide high-quality and impartial careers guidance.

John Hayes: The Education Act 2011 places a duty on schools to secure access to independent and impartial careers guidance for pupils in years 9 to 11. This provision will commence from September 2012 and will be underpinned by statutory guidance.

Gordon Henderson: I am grateful to my hon. Friend for his answer and I very much welcome the Government’s progress on launching the national careers service. Does he agree that it is vital that we use the service effectively to promote vocational training?

John Hayes: My hon. Friend will know that I visited his constituency to look at the excellent work that has been done on vocational training. The purpose of the independent advice and guidance is to ensure that people get advice appropriate to their needs. For too long, we have assumed that the only route to prowess came through academic accomplishment. The Government
	believe that the work of people’s hands matters too, and that those with practical tastes and talents deserve their place in the sun.

Barry Sheerman: The Minister knows that face-to-face contact and advice on careers is essential. Is it not the case that up and down this country schools are giving up on having a highly trained careers person in them and there is no access to an external schools careers service? Is that not sad for the kids in this country who do not have good, well-connected parents to give them the advice that they crave?

John Hayes: What preceded the position the Government have adopted was the Connexions service. I am not saying that Connexions did no good, but it certainly was not up to scratch. The skills commission inquiry said that it did not ensure that young people had good advice, Ofsted identified inconsistencies in provision and, as you know, Mr Speaker, Alan Milburn specifically called in his report for a national careers service. Of course face-to-face guidance matters, but it is not all that matters.

Marcus Jones: New apprenticeships have grown by 56% in my constituency over the past year and are vital to our future. Will my hon. Friend confirm that he will ensure that under any future arrangements for careers guidance in schools opportunities for apprenticeships are fully promoted?

John Hayes: Absolutely. My hon. Friend knows that the work the Government have done on apprenticeships has been outstanding and it is due to the support, encouragement and advice of hon. Members like him that that work is cutting through in the constituencies in the way that he describes. It is not just our constituencies: the shadow Secretary of State’s constituency has seen a 69% increase in the number of apprenticeships and I know that he will want to take the first opportunity to rise to the Dispatch Box and congratulate the Government on that.

Karen Buck: During the passage of the Education Bill, the Minister spoke movingly of the scope for the careers guidance service to be a driver of social mobility and quoted a survey that found that 27% of state school pupils have received bad careers guidance, set against 6% of private pupils. The model he has developed for careers guidance leaves 16 to 19-year-old school leavers with only a web or helpline service and does not transfer any of the money from careers guidance to schools for face-to-face services: how many private schools is he aware of in which teenagers receive only a web-based or telephone advice service?

John Hayes: I welcome the hon. Lady’s question on this subject, because she, too, will want to know that in her constituency, apprenticeship numbers are also up by 69%. To answer her question directly, it is absolutely right that schools make a judgment about the mix of provision that suits their pupils. She is right, too, that private schools typically buy independent, impartial advice and that is the kind of advice that all children deserve, which is why we are changing the situation.

Rural Schools Funding

Stephen Phillips: What steps he is taking to ensure adequate funding for rural primary schools.

Tim Loughton: The Government recognise the vital contribution made by rural primary schools to their communities. We believe that in many parts of the country, the current funding has not supported rural areas properly. Our recent consultation on reforming the funding system looked carefully at how small schools should be supported and we aim to consult further on more detailed proposals in the spring.

Stephen Phillips: It is a fact that small rural primary schools cost, on average, 50% more to fund. With vastly reduced resources, that is a huge challenge for local authorities. What precisely is my hon. Friend doing and going to do to support funding for such schools given their importance in constituencies such as mine?

Tim Loughton: My hon. and learned Friend makes a good point. The current methodology was inherited from the previous Government and the funding system is based on historical and out-of-date assessments of need. The system is illogical, unfair and opaque and that is why we have had the first phase of the consultation and will be taking its findings to face further, more detailed consultation and proposals will be made in the spring. I hope that he will contribute to that process on behalf of his schools.

Primary School Places

Matthew Offord: What steps he is taking to tackle the shortage of primary school places in (a) Hendon constituency and (b) England.

Michael Gove: This year, we have made available £1.3 billion to fund school places in England. The London borough of Barnet’s share in 2011-12 is £12.8 million.

Matthew Offord: I congratulate the Secretary of State on tackling a problem that was neglected by the previous Government and I thank him for and congratulate him on the free schools initiative, which has provided Etz Chaim with an opportunity in Mill Hill. Does he agree that London has always had a problem with school places? Recently, I had correspondence with a constituent who has found that although her son was given a place at a nursery school, he was not given the opportunity to have a place in a reception class. That means that he will have to walk more than two miles even though there are seven other primary schools in the immediate area of Hendon.

Michael Gove: My hon. Friend makes a very good point. One of the dreadful problems we inherited from the previous Government was a failure adequately to prioritise capital to ensure that there were new school places in areas of population growth. As we know, population growth is exceeding all expectations, which
	is why we need to do everything possible to reform planning rules and building regulations to ensure there are more new schools.

Fiona Mactaggart: I should like to thank the Secretary of State for following up on the grant we got from the previous Government to create extra primary school places in Slough with another grant to create more of the primary school places we need. Shortly, my constituency will face a serious shortage of secondary school places, but many children who live nowhere near Slough are educated in our secondary and grammar schools. Will he consider looking, in the school admissions code, at places that educate children from a long way away but that do not provide places for local children?

Michael Gove: I am grateful to the hon. Lady for essentially advocating that we subsidise the expansion of grammar schools. I look forward to that becoming the policy of Labour Front Benchers.

English Baccalaureate

Karl McCartney: What assessment he has made of the effectiveness of the introduction of the English baccalaureate.

Nick Gibb: A survey of nearly 700 schools has shown that the English baccalaureate is having an immediate impact by increasing the number of pupils electing to take up a key set of academic subjects and by reversing declines in entry to subjects such as French, German and history, which we know are valued by universities and the wider public. The survey showed that 47% of pupils studying for their GCSEs in 2013 are taking academic subjects leading to the English baccalaureate, compared with just 23% entering that combination of subjects in 2011. That figure of 47% takes us back almost to the 49% who took those subjects when Labour came to office in 1997.

Karl McCartney: I thank my hon. Friend for that answer. Is he concerned that the impact of the English baccalaureate will undermine the value of excluded subjects such as divinity or religious education, which play an important part in providing students with a well-rounded English education?

Nick Gibb: Religious Education is an important part of the school curriculum, which is why it is compulsory up to age 16 and why it will remain so under this Government. The E-bac is small enough, with six or seven GCSEs, to allow time for the study of subjects such as RE, music, art or a vocational subject while also studying the E-bac combination of GCSEs that are regarded as the facilitating subjects. That will keep options open for longer and will widen opportunities.

Jonathan Reynolds: Does the Minister recognise that the E-bac will be inappropriate for some of the pupils represented in the figures he has just read out, but that schools will have to push their pupils towards taking that approach because of the retrospective and quite sloppy way in which all this has been introduced? What message does
	he have for teachers who want to motivate pupils using a wider curriculum if the E-bac is not appropriate for them?

Nick Gibb: No student should be entered for a subject that is not in their best interests. The E-bac is small enough to allow schools to offer a range of options, including a vocational or other subject that is motivational for that student while still taking the E-bac subjects if they are suitable for that pupil.

School Admissions Code

Jason McCartney: What his objectives are for the principal revisions to the school admissions code.

Nick Gibb: The White Paper, “The Importance of Teaching”, announced that we would consult on a simplified and easier-to-understand schools admissions code to overhaul a system that is too often complex, confusing and unfair for parents. The revised schools admissions code is another contribution to our continued drive to reduce the bureaucracy facing our schools and local authorities while retaining the key safeguards that will ensure a simpler, fairer and more accessible admissions system for all parents.

Jason McCartney: Much of the local opposition to the Lindley Moor development in my constituency was based on the pressure on already oversubscribed local schools. Will my hon. Friend join me in insisting that section 106 money allocations to local schools as part of those plans really do go towards easing the pressure on local school places?

Nick Gibb: Local authorities have a duty to ensure that there are sufficient school places for all children of school age in their area and the Government are supporting local authorities in the fulfilment of that duty. Kirklees council received £17.2 million of capital for 2011-12 and a further £0.5 million as a result of the additional £0.5 billion basic need funding that was announced recently. On section 106 funding, the Government are consulting on changes to the community infrastructure levy to make it more responsive to local needs, including the need to ensure that there are enough school places.

Primary School Places

Nick de Bois: What steps he is taking to tackle the shortage of primary school places in (a) Enfield North constituency and (b) England.

Michael Gove: Of the £1.3 billion available to fund additional school places in England, the London borough of Enfield’s share is just under £16 million.

Nick de Bois: Enfield council recently announced a strategy to cope with the increasing demand, but it gives no specific consideration or role to free schools. What advice can the Secretary of State give to those interested in setting up free schools who face this purely ideological barrier?

Michael Gove: It is a great pity that Enfield Labour council is not as supportive of free schools as it should be. Both the hon. Member for Liverpool, West Derby (Stephen Twigg), the shadow spokesman for education, and I have visited superb free schools in Enfield, and I hope the Labour local authority there moves with the times and supports those free schools in doing a fantastic job for children in disadvantaged circumstances in a borough that deserves better.

Stella Creasy: Inevitably, the provision of school places in neighbouring boroughs such as Enfield will have a knock-on effect in places such as Waltham Forest. The Secretary of State is aware that a quarter of all responses to his consultation on the national schools funding formula came from Walthamstow, from parents and governors in my constituency who are desperately concerned that we are facing a shortage of 1,200 places as a result of the cancellation of the Building Schools for the Future project. Will Ministers agree to meet parents and governors from my constituency to talk about the desperate shortage of places in Waltham Forest and what can be done?

Michael Gove: I am not surprised that we had so many representations from Waltham Forest, and Walthamstow in particular, given that the constituency representative for Walthamstow is The Spectator parliamentarian of the year award-winner as campaigner of the year.

Mr Speaker: We congratulate the hon. Lady.

Bob Russell: As the Secretary of State knows, there is a shortage of primary school places right across the country. Does he agree that the situation is made considerably worse when the local education authority shows an inability to undertake forward planning? Thirty primary schools in Colchester have waiting lists. Will his officials please chase Essex education authority to get on with providing schools in my constituency?

Michael Gove: Consider it chased.

Munro Review Implementation Working Group

Meg Munn: What progress has been made by the Munro review implementation working group.

Tim Loughton: The Government’s response to the Munro review was informed by an implementation working group convened for that purpose. We continue to work with a range of partners to take forward these important reforms. We will consult early next year on the revision of statutory guidance. More flexible assessment processes are being trialled in eight local authorities. Ofsted has consulted on new inspection arrangements and we have published a work programme on safeguarding children in the NHS.

Meg Munn: The Minister started off well, publishing the minutes of the implementation working group on the website. Unless the working group has not met
	since, the last minutes are for May 2011. Will he give me an update on the report that he asked for on the funding implications of the Munro review?

Tim Loughton: I set up the implementation working group specifically to translate the Munro review recommendations into practical things that we could implement before we published the Government’s response, so they informed the Government’s response which we published before the summer. We have used members of that implementation group to inform the work that we are doing on all those aspects that I mentioned and others. My intention is to reconvene the implementation working group early in the new year to monitor the progress that we have made and see what more we need to do.

Academies

Joan Walley: What his policy is on converting primary schools into academies.

Michael Gove: I am in favour.

Joan Walley: I am pleased that we have got the Secretary of State to answer the question. I am in favour of head teachers, governors and local education authorities having a real debate about how to get primary schools to improve. How will the Secretary of State take account of special educational needs and outstanding Ofsted reports? Would he or one of his Ministers meet me, the local education authority and the heads about the schools which, it seems, will be forced to become primary school academies?

Michael Gove: I am grateful to the hon. Lady for her point. As she knows, education standards in Stoke-on-Trent have not been good enough for too long, and we particularly need to tackle underperformance at primary level. We need to find the right sponsors to help those primary schools turn round, but we can do so far better if we collaborate with the local authority and co-operate with local Members like herself and the hon. Member for Stoke-on-Trent Central (Tristram Hunt), who are passionate about change. I will make sure that a Minister makes time to talk to her and her parliamentary colleagues.

Literacy and Numeracy

Dominic Raab: What steps he is taking to improve the teaching of numeracy and literacy in primary schools.

Nick Gibb: Good-quality teaching is fundamental to improving numeracy and literacy. We are reviewing the national curriculum to ensure an enhanced focus on literacy and numeracy. We will recruit more high-quality graduates and ensure that all newly qualified teachers have the skills to teach well, particular in teaching reading through systematic synthetic phonics. We are supporting existing teachers, for example by making match funding available for phonics materials and training and by increasing the number of specialist maths teachers.

Dominic Raab: I thank the Minister for that answer. In 2009-10, one in five trainee teachers failed their basic numeracy and literacy tests, with thousands failing on their second attempt. What steps is he taking to ensure basic academic rigour in the teaching profession?

Nick Gibb: I agree completely with my hon. Friend’s comments. That is why we have announced that, from September 2012, a person must pass a literacy and numeracy skills test before starting teacher training and will be allowed only two resits, rather than being able to take the test an unlimited number of times. From September 2012 we will also raise the pass mark and carry out a complete review of the test’s contents to ensure that we are properly testing the literacy and numeracy of those teaching in our classrooms.

Elizabeth Truss: The top-performing countries in maths, such as Singapore, hardly use calculators at all in primary schools. Britain uses calculators more than any other country and is ranked 28th in the world in maths. Does the Minister think that there is a correlation?

Nick Gibb: I read my hon. Friend’s article in The Sunday Times this weekend with great interest. She made some very important points. She has championed the importance of high-quality maths teaching in our schools and knows the importance of maths not just for an individual’s ultimate opportunities, but for the economy as a whole. I hope that she will continue to contribute to the national curriculum review of maths.

Sure Start Children’s Centres

Karl Turner: What estimate he has made of the likely size of the Sure Start children’s centre network by the end of the 2012-13 financial year.

Sarah Teather: Local authorities have a duty under section 5A(1) of the Childcare Act 2006 to ensure that there are sufficient children’s centres to meet local need. Many local authorities are reviewing their provision, and they must consult before making any significant changes. The situation changes constantly and it is not possible to predict accurately the position at the end of the 2012-13 financial year. The early intervention grant provides enough funding to retain a network of Sure Start children’s centres.

Karl Turner: The Minister recently visited Little Stars children’s centre in my constituency and was impressed by the quality and commitment of staff to the service. Will she commend the Labour council leader for prioritising Sure Start, despite the savage cuts handed to it by the Government, and urgently reconsider the Government’s decision to remove ring-fencing?

Sarah Teather: I very much enjoyed my visit to Hull and was extremely impressed by much of the work being done on the ground, particularly the innovative and fascinating work that a number of centres have been doing to link children’s services with health. As I have said already, I commend local authorities that are
	prioritising children’s services on the ground. That is certainly the message that we have given out clearly to local authorities.

Annette Brooke: A recent newspaper article suggested that the Minister’s Department did not know what impact there has been on the services provided within children’s centres. I hope she will agree that services are more important than the centres themselves. What research will she carry out on that, and will she ensure that good practice is publicised?

Sarah Teather: The Department has commissioned an ongoing evaluation of children’s centres in England, so any changes that are made as a result of Government policy, particularly the move to payment by results and changes in other services offered by children’s centres, will certainly be picked up by the evaluation.

Sharon Hodgson: Last week the Department finally admitted that the Government’s damaging cuts to early years are resulting in services being withdrawn and children’s centres being decommissioned and having to close their doors to parents, but we all know that those figures are just the beginning. Councils are now looking ahead to the next financial year, with the reserves drained and the easy cuts having already been made. How many centres will have to close before this out-of-touch Government and out-of-touch Secretary of State admit their mistakes and save our Sure Starts?

Sarah Teather: Our survey suggests that there have been six closures and 124 mergers since last year, out of a total that started at 3,631, so there has been a 3% change in the number of Sure Start children’s centres, demonstrating that most local authorities are not only doing the best in what are, I recognise, very difficult circumstances, just as they are for the Government. Those authorities are prioritising services on the ground and that is certainly what we are encouraging them to do, as we ask them to publish the information on what they spend, under the new transparency requirements that the Government have introduced. Similarly, payments by results will focus them much more on outcomes.

Trends in Education and Schools Spending

David Hanson: What assessment he has made of the findings of the report by the Institute for Fiscal Studies on trends in education and schools spending.

Michael Gove: I refer the right hon. Gentleman to the answer I gave a wee while ago.

David Hanson: The report says that spending on 16 to 19-year-olds’ education has fallen by more than 4%. At the same time, an Association of Colleges report shows that half of all colleges have seen a significant drop in enrolment by 16 to 19-year-olds, including in some cases a drop of up to 15%. Does the Secretary of State think that the two are by any chance related?

Michael Gove: I absolutely do not, given that the changes in 16 to 19-year-old funding do not affect colleges. They primarily affect schools, as schools are brought into correlation with colleges. The good news is that the very best colleges—those that are outstanding—are recording an increase in the number of students, and overall that is part of a very happy picture of rising participation.

National Citizen Service

Lisa Nandy: What plans his Department has to allocate funding to the national citizen service beyond 2012.

Tim Loughton: The pilots that have been run this year and will be run next year are funded through the Cabinet Office, and we will discuss with it and the Treasury how the scheme is then rolled out to the 60,000 and 90,000 places that we have forecast for subsequent years.

Lisa Nandy: A recent Education Committee report highlighted the alarming disappearance of youth services throughout the country. Does the Minister accept that replacing long-term youth services, which were particularly good for most disadvantaged children, with an eight-week programme does not constitute a strategic vision for young people? What will he say to those young people who feel absolutely betrayed by the decision that his Government have taken?

Tim Loughton: Of course the hon. Lady is completely wrong in her premise. The national citizen service, as I have just described, has been funded from a completely separate source from that of youth services—coming through local government and the Department for Education. She knows my concerns about how certain local authorities are treating youth services as a soft target for some of their cuts, and this Government will publish shortly our “Positive for Youth” policy, which will send out some very strong messages about the value of well-targeted, quality youth services run in partnership and under new models, because for too many years they were just not reformed under her Government.

Topical Questions

Gavin Barwell: If he will make a statement on his departmental responsibilities.

Michael Gove: The Minister of State, Department for Education, my hon. Friend the Member for Brent Central (Sarah Teather), recently announced that we will spend more money to ensure that all disadvantaged two-year-olds have access to 15 hours of pre-school learning. Consultation is now taking place to ensure that the most deserving children get the best possible start in life, and I encourage all Members to contribute.

Gavin Barwell: Over the past year there has been a 10% increase in the number of children in reception classes in the London borough of Croydon, with further increases predicted in September 2012 and September 2013.
	I warmly welcome the almost £8 million that my right hon. Friend announced last week, but at the risk of sounding like Oliver Twist I also hope that there will be further such tranches of money in future.

Michael Gove: My hon. Friend not only sounds like Oliver Twist, but displays a sense of “Great Expectations” about what I can get out of the Chancellor—[Hon. Members: “‘Hard Times’!”] Well, really it is a “Tale of Two Cities”: the City of London under Labour, under-regulated and, sadly, not paying the taxes that it should have; and the City of London under the Conservatives—at last getting the resources into the Exchequer which, I hope, on a serious point we can give to the children in Croydon, who do need more school places.

Alun Michael: Has the Secretary of State yet woken up to the depth of anger among teachers, illustrated by a head teacher in my constituency, just coming up to retirement, who tells me that she feels cheated by a Government who want her to work longer for less, when she has already delivered her half of the bargain?

Michael Gove: First, I say to the right hon. Gentleman that if the head teacher in his constituency is coming up for retirement, she will be pleased to know that, under the coalition Government’s proposals, she will be not be affected by any change to her pension whatsoever.

Nicky Morgan: Leicestershire county council is currently reviewing the availability of school walking routes, including the one to Humphrey Perkins high school from Sileby to Barrow in my constituency. The county council considers that route to be reasonably safe, but the head teacher, the parents, the pupils and I do not. Will the Minister tell me the Government’s view on when safety becomes more important than the simple availability of a route?

Tim Loughton: I am aware of my hon. Friend’s interest in this issue. I recently met the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), with another hon. Member and one of his councillors who were raising the same point. I simply point out to my hon. Friend—I am very sympathetic to this point—that local authorities are under a duty to make travel arrangements where the nature of the route to school is such that the child cannot be reasonably expected to walk in reasonable safety. Councils should not be re-designating roads without having done a safety check, and we should be asking some questions.

Tristram Hunt: Research suggests that continuous teacher training offers the surest route for school improvements. What steps is the Secretary of State’s Department taking in conjunction with the Department for Business, Innovation and Skills to ensure that university departments are opening up to local schools, so that teachers are up to speed with the latest scholarship and can inspire their pupils?

Michael Gove: That is a typically acute point from the hon. Gentleman. One of the things we are doing is to invite the new group of 100 teaching schools that we
	have designated to play a closer role in collaboration with universities. Just last week, I was talking to the Royal Society about how important it is that universities and learned societies ensure that the best teachers can become accredited as masters in their field so that they remain up to speed with developments in their subject.

Laura Sandys: The Minister has made great headway in ensuring that looked-after children are not sent beyond their local authority boundary. However, 30 children from Greenwich have been placed in South Thanet in addition to the number it has placed before, and the number from Lewisham has increased by 15 in the past six months. I wonder what more we can do.

Tim Loughton: I am well aware of my hon. Friend’s genuine interest in that matter and she has been to see me with other colleagues. When we brought in the new guidance earlier this year, I wrote to every director of children’s services to remind them of their obligations to house looked-after children as close to home as possible. I have taken the matter up again with the office of the Mayor of London and will be making further representations to those London boroughs that particularly impact on south-eastern seaside resorts such as her own. They should not have to take such large pressure.

Emma Reynolds: According to the Institute for Fiscal Studies, Wolverhampton will be one of the biggest losers from the Government’s new national funding formula. Schools in my constituency stand to lose 10% of their funding, whereas schools in Buckinghamshire will gain 10%. Why is the Secretary of State so determined to take from the poor to give to the rich?

Michael Gove: The Institute for Fiscal Studies projections were based on its guesses. However, something it has said about reality rather than the future is that, at the moment, this Government are ensuring that schools educating the poorest receive the most, because our pupil premium will be worth £2.5 billion by the end of this Parliament. That is something the Government the hon. Lady supported last time round never did.

Eleanor Laing: Is the Secretary of State aware that many, many parents of children with special needs who were struggling to find a suitable school will be very pleased that he has decided to extend the free schools programme to special schools? How many special schools does he estimate will be free schools within the next few years and how many children does he estimate that will help?

Michael Gove: I am very grateful to my hon. Friend for her point. We need to ensure that all children who have special needs are better educated and we particularly need to ensure that the energy and enthusiasm of people in the third sector are galvanised. At this stage, I cannot give her a firm figure on how many students and schools are involved; all I know is that a small bridgehead will expand over the course of this Parliament.

Ian Austin: The Secretary of State will no doubt be delighted to hear that, on Friday, I visited the university technical college in Walsall and,
	credit where it is due, it was fantastic. He will also be pleased to hear that tomorrow I am meeting Lord Baker to discuss my campaign to bring a UTC to Dudley. Sadly, only one of the 70-odd UTCs that will open nationally is currently in the black country. Will the Secretary of State meet me too, so we can discuss how we can open a UTC in Dudley and deal with the urgent need to drive up vocational standards and bring new jobs and industries to the area?

Michael Gove: It would be a joy.

Edward Leigh: So many members of the Cabinet, including the Prime Minister and Deputy Prime Minister, owe their start in life to private education. Many other European countries have many more bridges between private and state education, with, for instance, the state paying the salaries of teachers in private schools. Will the Secretary of State confirm that he has not ruled out new, imaginative ways of helping ordinary people to access private education?

Michael Gove: I try never to rule anything out; life is too short. To return to the Oliver Twist metaphor that we had earlier, I want to ensure that we do not just save Oliver and leave the Artful Dodger and the rest of Fagin’s gang to the wolves, but ensure that every child in poverty is helped. It is therefore important that we all put pressure on independent schools to live up to their charitable foundation by sponsoring academies and doing more for all children in need.

Kevin Barron: The findings of the Institute for Fiscal Studies on Rotherham metropolitan borough indicate that secondary school education will take a spending cut of between 11.8% and 13.4%. Given that Rotherham is still in the highest 20% of deprived areas in this country, what has happened to the concept of “We’re all in it together”?

Michael Gove: As a deprived area, Rotherham will, over the lifetime of this Parliament, benefit increasingly from the pupil premium. The report to which the right hon. Gentleman refers is a projection—a guess. The IFS is a fantastic think-tank, but it is speculating, not stating.
	Let me point out that every single question from Opposition Front Benchers during the course of this Question Time was a plea for more money; not a single question was about the case for reform. In a nutshell, there we have the problem with today’s Labour party: an outstretched hand demanding more cash but not a single thing to say about raising standards.

Richard Fuller: Here is a question about reform, not extra cash. With early adopter schools that are well equipped to convert to academies already on the pace in becoming free-standing academies, what extra support, advice and guidance can my right hon. Friend give to the middle area of schools that are considering moving to being an academy but have not yet got up the nerve to make that change?

Michael Gove: All I would say is this, “Come on in. The water’s lovely.” In Bedford and Bedfordshire, schools that have converted to academy status have already seen their standards increase, and their head teachers have
	been able to ensure that money is spent on the pupils’ priorities, not the bureaucracies’ priorities. I am looking forward to working with my hon. Friend and all Bedfordshire MPs to ensure that more schools convert to academy status and, in so doing, raise standards for all children.

Geoffrey Robinson: On academies and capital expenditure, the Secretary of State will recall that I was recently in touch with him, yet again, about Woodlands school in Coventry, which, having narrowly missed out on Building Schools for the Future, has turned into an academy in its desperation for some support from the Government and now finds that it is still not eligible for any further capital expenditure. Will he look at that and do something about it?

Michael Gove: The Priority School building programme exists specifically to help schools like Woodlands. At the moment, we are inviting bids from schools across the country and assessing those bids against each other. In due course, there will be an announcement about additional capital support for the schools in the worst condition.

Duncan Hames: Now that the Education Act 2011 has Royal Assent, the Minister will be looking at criteria for determining whether a school causing concern should be taken over by the governing body of another school. Can he assure me that these decisions will be made on the basis of the most up-to-date assessment of a school’s progress?

Michael Gove: That is a very fair point. We want to make sure that we target our attention on schools in the greatest need. If a school has had a historically poor record but, for example, a new head teacher or a new chair of governors has turned it round in the past 12 months, of course we will interpret the criteria flexibly.

John Healey: The Secretary of State did not answer the question from my right hon. Friend the Member for Rother Valley (Mr Barron), which was about the distribution of funding under the Secretary of State’s direct funding plans. Rotherham secondary schools are set to lose out by £12 million in an area where we already have high and rising deprivation. This is simply wrong. Will he give a guarantee to local parents, students and teachers that they will not lose out like this?

Michael Gove: I am grateful to the right hon. Gentleman, but I should say that this matter is under consultation at the moment. I should also say that the Association of School and College Leaders, the National Association of Head Teachers and every representative of head teacher opinion says that the current funding system needs to be reformed. Once again I say to him—now that he is, sadly, no longer in the shadow Cabinet—that it is not enough for Labour Members simply to ask for more; they have to push for reform as well as demanding more cash.

Sajid Javid: On that note, school children in my constituency of Bromsgrove will receive £1,000 less per head this year than those in neighbouring
	Birmingham. Does my right hon. Friend agree that that is because under the previous Government school funding was allocated on the basis of party politics and not need?

Michael Gove: As we say in Scotland, “Facts are chiels that winna ding.” The truth is that the current system of school funding is inequitable. The Institute for Fiscal Studies has made that case most powerfully recently.

Luciana Berger: In an earlier answer, the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton) again deferred to Magic Breakfast, an excellent charity, to plug the massive funding gap that has been left by the Government taking away extended schools money. Magic Breakfast provides 200 schools with free breakfast, yet 3,000 breakfast clubs have been closed across the country and thousands more are under threat. What are the Government going to do about that?

Tim Loughton: Let me have another go. Just a few weeks ago, I met the former chairman of Greggs who set up the breakfast club. That company did so not on the basis of how much money the Government were or were not putting into it or because of Government policy, but because it thought that it was the right thing to do, it was in a position to do it and it was good corporate social responsibility. The company did it and it did not take Government money to ensure that companies could step up to the mark and do their bit.

Matthew Hancock: As the Secretary of State knows, support in the community of Brandon for the Breckland free school is extremely strong. Will he assure me that all expressions of interest from parents, both on official forms and on the forms from the free school, will be taken into account when he makes a decision on whether that free school should go ahead?

Michael Gove: I had the great pleasure of meeting the parents behind that free school application. They were a fantastic model of citizen action. The Department will do everything possible to ensure that their bravery, courage and energy in ensuring that their children get the best possible education are supported to the full.

Dennis Skinner: A few minutes ago, the Minister for Further Education, Skills and Lifelong Learning talked about the increase in the number of apprentices in various parts of Britain. In Bolsover, that started three years ago when the working neighbourhoods fund was used to increase the number of apprentices in our area. Now, with the 28% cut for the local authority and the working neighbourhoods fund due to finish next spring, there will be a loss of apprenticeships in that part of Britain. Will he have a word with his colleagues to sort that out?

John Hayes: As the hon. Gentleman knows, this Government have produced the largest number
	of apprenticeships in modern history. I am very happy to look at his constituency, but I have to tell him that according the latest statistics—not my statistics, but the official figures—apprenticeship numbers in Bolsover are up by 65%.

Philip Hollobone: Will the Secretary of State take this opportunity to praise those teachers and head teachers who are going to put their pupils first and refuse to go on strike a week on Wednesday?

Michael Gove: Once again, I am grateful to my hon. Friend. I stress that it is an important civil right to be able to withdraw one’s labour. I also stress that this Government understand the widespread anxiety and anguish of hard-working public sector professionals, who deserve a decent pension. However, let me also make it clear that it is wrong for teachers and head teachers to withdraw their labour, to deprive children of a day’s education and to make life more difficult for working parents—wrong, wrong, wrong.

Julie Hilling: It is reported that youth services are taking a 25% cut on average and we know that some youth services are disappearing altogether. Will the Minister tell us how many youth projects have closed, how many youth workers have been made redundant and what he will do to ensure that local authorities fulfil their statutory responsibilities?

Tim Loughton: I cannot tell the hon. Lady how many but I will tell her that this Government are funding 63 myplace centres, the latest of which I opened in Bognor Regis just last Friday. In the next few weeks, the Government will produce their “Positive for Youth” policy, which will point to the future of new partnerships, new forms of funding and new ways of working together to ensure that our young people get decent youth services and a decent offer up and down the country. Reform needs to come to youth services in this country because the model under the previous Government was not sustainable.

Mr Speaker: To make a statement, I call the Exchequer Secretary to the Treasury, Mr Mark Hoban.

Northern Rock

Mark Hoban: With permission, Mr Speaker, I would like to make a statement about Northern Rock. As the House will be aware, on 15 June this year the Chancellor of the Exchequer announced that Northern Rock had been put up for sale. Last week, he announced that he had agreed the sale of Northern Rock plc to Virgin Money. I am grateful for the chance to update Parliament on those events.
	As hon. Members will be aware, the collapse of Northern Rock four years ago foreshadowed a crisis that was to engulf the global financial system. The queues of people outside branches of Northern Rock—the first run on a British bank in more than a century—remain to this day a lasting image of the crisis. It was a sorry result of the inadequate regulation and irresponsible banking that the previous Government presided over, and it was a crisis that led to a range of Government interventions in the financial sector. The sale of Northern Rock to Virgin Money is an important step towards normalising the Government’s role in the financial sector and getting the Government out of the business of running the banks.
	The deal with Virgin Money is expected to be completed on 1 January 2012, pending European Commission merger clearance and Financial Services Authority approval. Let me reassure the House that the sale route represents the best value for money for the taxpayer. United Kingdom Financial Investments and its independent advisers looked exhaustively at all potential exits, including stand-alone remutualisation, combination with an existing mutual and initial public offering, but ultimately advised that a sale would generate the best value for money for the taxpayer.
	Furthermore, under the terms of the state aid agreement entered into by the previous Government, we have to transfer control of Northern Rock to a new owner by the end of 2013. That limits the window for getting Northern Rock plc back into the private sector. Combined with the fact that the bank is likely to be loss-making well into 2012, a sale to Virgin Money now is the best option measured against taxpayer value for money. We have also carefully assessed the impact of the sale on competition and financial stability.
	Let me set out the details of the deal. The cash elements are as follows. Virgin will make a cash payment of £747 million to the Treasury on completion, which is expected to be on 1 January, conditional on regulatory approvals. We also expect about a further £50 million once we know the actual final net asset value of Northern Rock plc at the end of 2011. In addition to the cash payment, the Government will hold a capital instrument in Virgin Money, with a par value of £150 million and paying interest at 10.5%. Furthermore, we have ensured that the taxpayer will get a share of any upside. In the event of a profitable sale or initial public offering by Virgin Money, an additional cash consideration of between £50 million and £80 million will be paid to the Government.
	By way of comparison, our shareholding in Northern Rock is valued at £1.2 billion on the Treasury’s balance sheet, because the previous Government injected £1.4 billion of capital into the loss-making bank at the start of
	2010. By the end of this year, that value will have decreased further due to the losses that Northern Rock currently makes. Despite all that, we have sold Northern Rock plc at a price-to-book multiple of about 0.8. Given that other UK banking stocks are trading at multiples of around 0.5, that is a good outcome for the taxpayer. Of course, when we consider the final position we will need to look at both Northern Rock Asset Management and Northern Rock plc to see the final outcome for the taxpayer.
	This is also a good deal for the economy of the north-east, with the potential to create new growth and new jobs in the area. Virgin Money has committed to there being no further compulsory redundancies beyond those already announced for at least three years. It will also make Newcastle the operational headquarters of the new, combined business. It will retain the total number of existing branches, with the highest concentration in the north-east, and with plans to expand as the business grows.
	We are pleased that Virgin Money has also committed to extending the current financial agreement with the Northern Rock Foundation to the end of 2013. We all know that the Northern Rock Foundation plays a vital role in tackling disadvantage in the north-east and Cumbria. Virgin has also committed to exploring how Virgin Money Giving and the foundation could work together in the future.
	This deal will create almost immediately a new, credible competitor in our retail banking sector, thus increasing choice for consumers. The Government are clear that more competition is needed in the banking sector. A competitive banking sector ensures that the economy benefits from banking products and services at efficient prices. Competition is also a spur to innovation and economic growth, but choice has diminished in recent years as a number of high street banks and building societies have disappeared or merged. As set out in this Government’s coalition agreement, we are committed to promoting competition in the banking sector and to the return to the private sector of the Government-held stakes in banks, of which this measure is a key part.
	The Virgin brand has a strong reputation for growth and innovation and I am confident that its entry into retail banking will provide a real challenge and improve diversity in the banking sector. I want to be clear that for current Northern Rock customers, it is business as usual. They will not need to take any action as a result of the announcement. Virgin Money also plans to offer personal current accounts and small business banking products in due course.
	I know some would have liked to see Northern Rock re-mutualised, but no final bids were made by mutuals and no workable plans for stand-alone mutualisation were put forward. None the less, the Government remain committed to promoting mutuals, which is why we are working with the mutuals sector to support its ambitions and ensure that it is not disadvantaged compared to bigger established banks—all to foster diversity and create a more competitive banking industry.
	Of course, the sale of Northern Rock is only one step to a new banking sector—it is not simply a return to business as usual. The last crisis cost the taxpayer billions of pounds, and we cannot afford to repeat that. That is why this Government are pursuing ambitious reform of the financial sector at home and abroad,
	ensuring that we embed a competitive, successful but secure financial sector, and one that supports growth across the entire economy without jeopardising its stability; why we are fundamentally reforming the failed tripartite system, entrenching a much greater and much-needed focus on macro and system-level risks; why we are leading the international agenda for full implementation of the Basel III standards, to ensure that our banks are resilient to ongoing market turbulence; why we support in principle the recommendations of the Independent Commission on Banking to ring-fence better-capitalised high street banks, reduce taxpayer exposure through powers of bail-in, and increase competition in banking; and why we have secured commitments from the UK’s biggest banks to provide £190 billion of new credit to businesses across the country this year, lending £76 billion to small and medium-sized enterprises this year alone, which is £10 billion more than banks lent to them last year.
	The sale of Northern Rock to Virgin Money is an important milestone in this Government’s efforts to return state-owned banks to the private sector. It represents good value for the taxpayer and provides an economic boost to the north-east region. For consumers across the board, it means greater diversity and choice in financial services.
	I firmly believe that Virgin Money will have a hugely beneficial impact on the banking landscape in the years to come, providing better outcomes for customers and businesses. Of course, this is only one step towards a reformed banking landscape. The Government will continue to work hard to remedy the regulatory failures of the last decade, to promote a more competitive sector, and to ensure that we embed a stable and successful financial system that serves and not jeopardises the economy. I commend this statement to the House.

Mr Speaker: I apologise to the hon. Gentleman for inadvertently demoting him. I had been advised that this statement was to be made by the Exchequer Secretary to the Treasury, but I realise that the hon. Gentleman is a still more senior man, serving the Government as Financial Secretary.

Christopher Leslie: The Chancellor might have chosen to make this announcement when Parliament was in recess, but he really ought to have been here today—[ Interruption. ]

Mr Speaker: Order. I just say this, once and for all, to the hon. Member for Reading West (Alok Sharma): sit there silently, please, doing your duty. If you feel unable to do so, you have a very simple alternative, which is to leave the Chamber.

Christopher Leslie: Thank you very much, Mr Speaker. I was simply making the point that the Chancellor ought to have been here today because there are so many questions to answer about this deal. Obviously it is right that Northern Rock should be leaving public ownership, just as it was right to take it into public ownership in 2008 to avoid a catastrophe, but the decision to sell at this time and in this manner raises some very serious questions. Will the Minister confirm the
	net loss to the taxpayer from the sale, and that the proceeds will be used in their entirety to pay down the national debt?
	On the sale’s timing, I read in the papers, and the Minister said again today, how the Government are blaming Europe and Labour—I am surprised that they have not blamed the civil service yet. These are weak excuses that just will not wash. He should start taking responsibility for some of his own decisions, and he should be doing what is right for the British taxpayer, not hiding behind EU rules. If he felt constrained by the EU requirement to sell by the end of 2013—let us remember that it is still only 2011—why did the Government not try to change that? If he is now suggesting that it was a bad deal for the taxpayer and that he would rather have waited, why did he not ask the European Commission for an extension? With the economy flat-lining, bank shares in decline and a deepening crisis in the eurozone, he could easily have made the case that circumstances had changed. Or does this fire sale suggest that they think that conditions will get even worse?
	The Government have a duty to ensure that the deal is good for taxpayers, the economy, the new company and its customers and staff, so why is he scared to issue an initial public offering for Northern Rock? With about £700 million of excess equity on its balance sheets, why on earth is he selling it privately for 66p in the pound? Contrary to the headlines, this deal is funded not principally by Richard Branson, but rather with £250 million from US financier Wilbur Ross, a stake from an Abu Dhabi sovereign fund and—wait for it— £250 million of Northern Rock’s own money, using its existing capital assets in a complex financial swap deal. Is the Minister not a little troubled that the company’s assets are being stripped even before it changes ownership?
	What is Northern Rock’s current core tier 1 capital position, and what does the Treasury anticipate it will be in three years? We know that the Financial Services Authority has voiced its anxieties about such a substantial removal of capital. What safeguards will it be given if these capital buffers are to be thinned out so dramatically? The Financial Times reports that Wilbur Ross has paid about 80% of the book value for Northern Rock, yet he is quoted as saying that he would have
	“to sell out a few years down the road for 1.5 times book value.”
	That is 150%. Is the Minister comfortable with the news that the Government have sold to an individual actively planning to dispose of the bank quickly and nearly double his money? Does that not indicate that the Treasury might be selling prematurely and at the wrong price?
	I am amazed that the Minister has agreed to underwrite a further £150 million of the buyers’ payments? I have heard of vendor financing, but agreeing to accept £150 million of debt so deeply subordinated as to be basically unsellable takes the biscuit. Is it not possible that the subsidy will be regarded as further state aid, and is he presumably seeking EU Commission approval for that? Will he at least guarantee that the Treasury will receive a payment every year on that £150 million, and that we will get it all back by the end of this Parliament?
	The coalition agreement promised to promote mutuals and financial services, yet no apparent consideration was given to the mutualisation of Northern Rock. Why did Ministers not try harder to develop that option?
	Will the Minister publish the analysis on the basis of which they dismissed a member buy-out? The concerns about the decision to run down £250 million of Northern Rock’s capital reserves are not just an issue for the taxpayer; they also reduce Northern Rock and Virgin Money’s ability to provide significant credit in a market crying out for mortgage finance. Despite the new owners’ reported assurances, there are no contractual guarantees that branches or jobs will be retained. Savers in Northern Rock will also need reassurance that their new bank’s depleted capital reserves will not bring repeated anxieties if another banking crisis occurs.
	The Chancellor opposed the original decision to rescue Northern Rock, saying:
	“I am not in favour of nationalisation, full stop.”—[Official Report, 19 February 2008; Vol. 472, c. 186.]
	Is this not a golden opportunity for him to hold up his hands and admit that he made a mistake, and do not the growing question marks lingering over this giveaway deal also suggest that his judgment is as wrong now as it was then?

Mark Hoban: That was a lame response to my statement. The previous Government presided over the failure of financial regulation and irresponsible banking culture that led to the collapse of Northern Rock. Now we have to deal with their legacy, and that includes the agreement that they struck with the European Commission requiring Northern Rock to be sold by 2013. Given the hand we were dealt by the previous Government, we had to do three things: get the best deal for the taxpayer, for the consumer and for Northern Rock and the north-east. The deal that we announced last week did just that.
	The hon. Gentleman asked about proceeds. As we have said, this is a one-off transaction, and the proceeds will go towards paying down the debt. He asked whether it would have been better to hold on to Northern Rock longer. The reality is that Northern Rock is currently loss-making, and it is expected to make losses in the first part of next year. The best outcome for Northern Rock is to be acquired by somebody who wants to use the base in Gosforth to expand the business and offer a better deal to consumers and the staff of Northern Rock. David Fleming, the Unite trade union official, said:
	“The treasury’s decision to sell Northern Rock to Virgin Money marks a significant moment in the history of this north-east based financial institution. After three years of turmoil and upheaval for the workforce at Northern Rock, Unite hopes that today will be the start of a secure future.”
	Let me deal with Virgin Money’s capital position, which the hon. Gentleman raised. Virgin Money has clearly set out to be a strong and dependable partner. Its core tier 1 capital ratio is 15%, which is much higher than that of many existing high street banks, which averages about 10%. Of course the FSA will approve the capital structure and will have to give its approval of the transfer of ownership, and hon. Members should welcome that support.
	On mutualisation, I made it clear, as did the Chancellor, that we were open to offers from existing mutuals to buy Northern Rock for a stand-alone remutualisation, but no firm bids were made in the final round. No one came forward with a well worked-out plan on how Northern Rock could be remutualised on a stand-alone basis, and that is why we took the decision we did. It
	was in the best interests of the taxpayer, the consumer, the north-east and Northern Rock to sell the business to Virgin Money.

Andrew Tyrie: In the Treasury Committee’s recent report on competition in retail banking, we argued strongly that competition, and not just short-term revenue maximisation, should play a major part in the sales of the nationalised banks. Have consumer interests influenced the Treasury’s decision to sell Northern Rock now, and does the Minister agree that increasing competition should be central to future divestments?

Mark Hoban: My hon. Friend makes an important point. We have studied the Treasury Committee’s reports on competition carefully. We agree with him that competition is vital to improve outcomes for consumers, whether they be business or personal; and, to the extent that divestments of banks help to deliver improved competition, that is something to be welcomed and borne in mind. There are other areas where we can look to improve competition in the banking sector. The Independent Commission on Banking has made its proposals, and we will respond to them in due course.

Several hon. Members: rose —

Mr Speaker: Order. There is extensive interest in this statement, which I am keen to accommodate, but I remind the House that there is another statement to follow. Therefore, brevity is of the essence.

Geoffrey Robinson: Is the Financial Secretary not aware that this is an appalling deal, and at quite the wrong time for the British taxpayer? Is he not aware that the European Commission cannot sanction the imposition of that date? The worst time to sell a company is when it is loss-making and when—as in this case—it has prospects of profits to come. He should have waited. It is the timing that is being opposed, and which has nothing to do with the European Union, but everything to do with the collapse of this Government’s economic policy.

Mark Hoban: The hon. Gentleman is well known for his business experience, but what we need is to get the best deal for the taxpayer and Northern Rock. The advice that we received from our independent advisers indicated that this was the best time. As I mentioned in my statement, we got a price-to-book ratio of about 0.8, which compares with other banks, which are currently trading on a price-to-book multiple of 0.5. That sounds to me like a good deal for the taxpayer.

Stephen Williams: I welcome my hon. Friend’s confirmation that this is the best value for the taxpayer and injects a new competitive force into the high street. He said that this was a milestone in the Government’s journey of returning the other state-owned banks to the private sector. Will he agree to continue to work with me and others who have imaginative ideas in this area to ensure that all citizens benefit from that rather larger transaction?

Mark Hoban: My hon. Friend has championed particular ideas about the distribution of shares in RBS, and we listen to those views carefully. It is absolutely right to
	see this as a milestone towards the normalisation of the banking system. It requires a significant reform to regulation and to the structure of banking, which is a course that we are embarked upon.

Michael Meacher: But is it not a scandal to sell off Northern Rock unnecessarily at this time at a cost to the taxpayer of up to a £500 million loss, especially when, in addition, the bad debts of Northern Rock Asset Management, which, significantly, the Minister did not mention, will be dumped on the taxpayer when the £50 billion of mortgages it still holds begin to default as interest rates rise?

Mark Hoban: Clearly, there are two parts to the Northern Rock business that the previous Government nationalised: the business that we are selling—Northern Rock plc—and Northern Rock Asset Management, which holds a lot of the old mortgage book. The previous Prime Minister assured the House that both would make a profit for the taxpayer.

John Redwood: I hope that Sir Richard Branson can turn this business into a profit-making, growing business, generating more jobs and paying some tax. Will the Minister remind us how much this bank has lost in state hands, which accounts for the fact that it is no longer worth what the Labour party paid for it?

Mark Hoban: The previous Government injected £1.4 billion-worth of capital into Northern Rock plc. That has gone down to £1.2 billion because of the losses incurred, and we expect further losses in this financial year and in the next. The challenge for Virgin is to use the platform it will have in Gosforth to grow the business, attract new customers and use its reputation for challenging incumbents.

Alan Campbell: Will the Minister give a cast-iron guarantee that the foundation will still exist beyond 2013?

Mark Hoban: It is a matter for Virgin Money and Northern Rock Foundation to discuss. Virgin Money has said as part of its agreement to acquire the business that it will extend existing arrangements to the end of 2013. It is keen to work closely with Northern Rock Foundation so that it can continue its excellent work in the north-east and Cumbria.

Michael Fallon: The big plus here is that from January we will have a strong challenger retail bank. Will my hon. Friend assure me that in taking forward the Vickers proposals, he will get on with creating other challenger banks, not least as alternative sources of support for small businesses?

Mark Hoban: My hon. Friend is right. From 1 January we will see a strong challenger on the high street from a business that has a reputation for taking on incumbents and offering a better deal for consumers. That is one of the great attractions of Virgin Money in this transaction. We want to take more action to improve competition on the high street. We are working closely with challenger
	banks to find ways of removing barriers of entry to the market so that they can grow their market share. One of the Government’s key commitments is to improve competition on the high street for both business and retail customers.

Roberta Blackman-Woods: I note that the Minister said that this agreement would lead to additional job creation in the north-east. Will he say how many jobs he expects to be created, of what type and by when?

Mark Hoban: What this deal does is preserve jobs in the north-east. Virgin is committed to not going beyond the existing management’s plans for compulsory redundancies. The growth of Northern Rock will come off the back of how well Virgin Money does in exploiting new markets and new opportunities. I think this is a good deal for the employees of Northern Rock. That is why staff cheered when the deal was announced on Thursday at Northern Rock’s offices in Gosforth. They wanted an end to the uncertainty that has hung over the business for the past four years. We have delivered that for them.

Mark Field: I accept that any Government should, in the Minister’s words, be looking to “get out” of the business of banking. Presumably, the fact that we have done this deal now rather than wait until the end of 2013 is due to the expectation of a considerable deterioration in the value of all the banks, including RBS and Lloyds banking group, where we have far more significant holdings. Will the Minister give an indication of the time period during which we might be getting out of the business of those two banks?

Mark Hoban: The decision to dispose of Northern Rock was taken in isolation from consideration of other banks. A particular set of circumstances appeared, which enabled us to sell while providing a good deal for the taxpayer, a good deal for the future of Northern Rock and a new competitor on the high street. That is why we sold Northern Rock to Virgin Money. I think it is a good deal for everyone concerned.

Chi Onwurah: I welcome the end of some of the uncertainty that has been blighting many of my constituents’ lives, and Virgin Money’s commitment to keeping Northern Rock’s headquarters in Newcastle, but the people of Newcastle and the country want a return to a longer-term, more responsible form of banking to ensure that this never happens again. Given that the Government ignored the possibility of mutualisation, choosing a complex financial arrangement instead, what confidence can the people of Newcastle have that they will achieve that aim?

Mark Hoban: No one put forward a workable plan for a stand-alone remutualisation of Northern Rock. No mutual came forward in the final round with a bid to acquire Northern Rock. There is no point in hoping for a white knight to appear to remutualise Northern Rock when the reality is that none was forthcoming. I hope that the hon. Lady shares the view of Councillor Nick Forbes, leader of Newcastle city council, who said that he was
	“delighted that the future of Northern Rock has now been decided with its sale to Virgin Money”.

Guy Opperman: I too was in Newcastle last week, when the foundation, local people, the Labour party and the cheering staff members in Northern Rock’s building in Gosforth were confirming—as were the unions—that this was a great deal. Is the Minister surprised that no mutual came forward, and will he explain once more why none would be willing to do so in the circumstances?

Mark Hoban: We went out of our way to encourage that. We spoke to various organisations that are keen to promote the idea of mutuality, but none of them could produce a workable model that would enable us to give money back to the taxpayer, and, as I have said, no mutual came forward with a bid in the final round. That was not for want of trying on our part. Clearly there was not the interest in the mutual sector in acquiring Northern Rock that people assumed to exist.

Catherine McKinnell: Of course my constituents in Newcastle welcome news that appears to offer some job security to many local people in the short to medium term, but will the Financial Secretary tell us what financial guarantees have been given to ensure that Virgin Money delivers on its promises?

Mark Hoban: Indeed. Councillor Nick Forbes, whom I quoted earlier, also said:
	“The decision by Virgin Money to make Newcastle their home sends a message of confidence in our city and the wider North East.”
	Virgin Money backed that up by saying that it would not make any compulsory redundancies beyond those already announced by management for the next three years, and I think that that provides a good level of assurance for Northern Rock’s staff.
	When I visited Northern Rock on Thursday and talked to some of its staff, they were clearly pleased that the uncertainty that had hung over the business for the last four years and acted as a brake on its development had been removed. They look forward to its continued growth under Virgin Money.

Alec Shelbrooke: The deal that the Minister has announced represents the best value that can be obtained for the taxpayer at this time, and for as long as financial crises continue to abound. We have secured the jobs of people in the north-east, hence the good cheer that is felt there. Does my right hon. Friend agree that the good news is here, and that the reason people may look po-faced is that, once again, we are clearing up a hell of a mess?

Mark Hoban: My hon. Friend is absolutely right. Since we came to office, we have reformed the failed tripartite arrangements that were introduced by the Labour party. We are changing the nature of banking in this country by establishing the Independent Commission on Banking, whose proposals on ring-fencing will mean higher levels of capital and better levels of liquidity for businesses. We are tackling the mess that Labour left behind, and the disposal of Northern Rock is part of that story.

Ronnie Campbell: This is a three-year deal by Mr Goody Two Shoes, Mr Branson. [Interruption.] That is what he is: Goody Two Shoes.
	What will happen to the people in Newcastle? Will he come to London, or will he go offshore after three years? Where is the guarantee for those workers?

Mark Hoban: I think that there is a better guarantee of jobs under the current proposal than there would have been if Northern Rock had continued as it was. The problem with Northern Rock was that its cost base exceeded the business that it was writing, and that posed a long-term—[Interruption.]

Mr Speaker: Order. As I said to the hon. Member for Reading West (Alok Sharma), I understand that there are very strong feelings and effects on constituencies on these occasions, but the hon. Member for Blyth Valley (Mr Campbell) must not chant a chorus from a sedentary position—or even, for that matter, from a standing position. We are grateful to him for his views when he is called to speak.

Matthew Hancock: Is not the argument that we should hold on to Northern Rock for a few more years in the hope that the price will go up just a punt on the stock market, and is that not exactly the sort of attitude that got us into this mess in the first place?

Mark Hoban: My hon. Friend is right. The mentality that, hopefully, something will turn up seemed to guide the Labour party when it was in government, and we are now trying to pick up the pieces of the mess they left behind.

Gisela Stuart: I want to be reassured that this is the right time to sell Northern Rock. I presume that the Treasury took into account the situation in the eurozone. If the Prime Minister currently believes the European Central Bank should be the bank of last resort and should therefore buy Italian bonds, why does the Financial Secretary think that back in 1976 a Labour Government did not instruct the Bank of England to buy British bonds but instead called in the International Monetary Fund?

Mark Hoban: rose—

Mr Speaker: Order. The relationship between that question and the matter under consideration is, at best, tangential, but I am sure it is not beyond the intellectual compass of the Financial Secretary to address it.

Mark Hoban: I was, indeed, intrigued about the role Northern Rock might play in bailing out the eurozone economies. It is essential that action is taken in the eurozone to tackle the fundamental problems it faces. The banking system must be recapitalised, the fiscal crisis in Greece and a number of other member states must be resolved, and a firewall must be put in place to ensure that the turbulence in the eurozone comes to an end. We are all working towards achieving that, and it is in our long-term interests to do so. The fact that we were able to dispose of Northern Rock against that backdrop is a good sign of what is happening here in the UK.

Richard Harrington: I, for one, would like to thank the Financial Secretary and his colleagues for this deal, as I believe it is a good deal for the taxpayer and it offers a good future for the employees of Northern Rock. Does the Financial Secretary agree with the shadow Chancellor, who unfortunately is not in his place but who said in 2006 that the tripartite committee provided robust supervision of risks to financial stability?

Mark Hoban: My hon. Friend makes an important point. The reality is that Northern Rock’s problems and ultimate failure as an institution were a consequence of the architectural flaws in the system of tripartite regulation, under which no one body was monitoring, and could respond to, the build-up of an asset price bubble, and no body was able, or prepared, to challenge Northern Rock’s business model which led to its being over-dependent on money borrowed in the wholesale markets. That was the cause of Northern Rock’s problems, and we are putting in place measures that will tackle some of them.

Ian Mearns: The Financial Secretary will remember the discussions we had in the summer and spring about this potential sale and the guarantees we were seeking about the Northern Rock Foundation. He said at the time that he could not give any guarantees about the foundation as he had to get the best deal for the taxpayer. Having failed to achieve that, will he go back and see whether he can get a further deal on the foundation beyond the one year that has been guaranteed?

Mark Hoban: There is a good deal for the foundation. There was no obligation on Virgin Money to continue the deal beyond 2012, but it has agreed to extend it to 2013, and it wants to ensure that Virgin Money Giving works with the foundation to enable it to continue its work. One of the challenges for the hon. Gentleman and his colleagues from the north-east is to work with Virgin Money and to persuade it of the merits of continuing to fund the foundation.

Alan Beith: My constituents who have worked for Northern Rock, and people throughout the north-east who care about the new institution having its headquarters there, will be astonished at Labour’s opposition to the deal, as it is designed to give a future to a bank that failed on Labour’s watch, when guarantees were not worth the paper they were written on.

Mark Hoban: My right hon. Friend makes an important point. As someone who was born and brought up in the north-east, I understand how important Northern Rock is to the fabric of the region, and how important it is as an employer and as a sign of prosperity. That is why I was keen to ensure that we got a good deal, not only for the taxpayer but for Northern Rock and the north-east. I am disappointed that so few voices from the Labour Benches have spoken up in support of what is a good deal for Northern Rock and its employees.

Tom Blenkinsop: It is amazing that the Government find the ability to mutualise public services but not to remutualise a former mutual. Will the Minister put
	evidence in the House Library over the next 25 months proving that this was, indeed, a good deal for the taxpayer now?

Mark Hoban: I have made it very clear that we acted on the advice that we had received from our independent advisers. They put forward the case that it was better for Northern Rock to be sold to Virgin Money than for us to sit on it or have it remutualised in one form or another, and I think that that is the best outcome for Northern Rock and its employees. I also think that Labour Members should recognise their role in the circumstances that led up to the failure of Northern Rock and show some contrition about the regulatory system that they left behind.

Peter Bone: For Northern Rock’s employees, borrowers and depositors, who does the Minister think would be better to run it: the Government or Virgin? It appears that Labour Front Benchers think it is the Government.

Mark Hoban: I have always taken the view—I think my hon. Friend will agree with me on this occasion—that these things are better run in the private sector than in the state sector. I think we will see good management and good leadership from Virgin Money, which will provide a long-term foundation for a credible competitor in the retail financial services sector.

Grahame Morris: My question is about the timing and sustainability of this deal. I wonder whether the Minister will answer a question that my hon. Friend the Member for Nottingham East (Chris Leslie) asked earlier about the reported recapitalisation—what we would refer to as “an asset strip”—whereby almost a third of the purchase price is reportedly coming from the bank’s current capital base. Does the Minister not feel that this would put the bank at greater risk in the future if the capital base is not quickly rebuilt?

Mark Hoban: This transaction is subject to regulatory approval by the Financial Services Authority, which will carefully examine a range of issues, including the capital position of Virgin Money. I have made the following point before, but it is worth repeating. Virgin Money’s core tier 1 capital ratio is about 15%, whereas most of the UK high street banks are operating at about 10%, so is strongly capitalised. This deal is subject to regulatory approval, and that should give all of us confidence in the future of Northern Rock.

Robert Halfon: As well as reassuring anxious employees that there will be no compulsory redundancies, will my hon. Friend confirm that there will be few branch closures under the new Virgin Money scheme?

Mark Hoban: I can indeed. One of the commitments given by Virgin Money was to maintain Northern Rock’s existing branch structure, particularly the branches based in the north-east, and as it grows and expands the services I suspect that it will want to open more branches, so that more people can access the deals that it is offering.

David Anderson: If this is the best time to sell Northern Rock—a time when it has made a loss, with the implication of what the Minister has said being that it has already made a loss for part way through next year—does that not show what the real story here is? It is not about the bank, but about the fact that the Government are tacitly agreeing today that the economy will be no better, or worse, in the next two years than it has been in the past year and a half, under their stewardship?

Mark Hoban: I do not agree with that at all. If the hon. Gentleman had spoken to Northern Rock employees over the past few months, as I have, he would have found that they clearly have the capacity to expand their services beyond what is currently on offer; they can cope with a bigger flow of savings and mortgages. That is good news, because it will enable Northern Rock to cope with the volumes that should flow from the acquisition by Virgin Money. If we did not sell Northern Rock now, the risk is that there would be further job losses to try to cut the cost base in line with the current business book. That would not be a good outcome for Northern Rock or its employees. The prospect of moving to Virgin Money has lifted the uncertainty from over the heads of Northern Rock employees. As one of them said to me on Thursday, “This is like an early Christmas present.”

Eleanor Laing: In contrast to the Opposition’s blind prejudice against the private sector, does the Minister agree that Sir Richard Branson’s undertaking that there will be no compulsory redundancies and no branch closures in the next three years shows that Virgin Money is a decent company that will bring benefits to Northern Rock’s savers and employees, and to the north-east generally?

Mark Hoban: My hon. Friend is absolutely right. What is impressive about Virgin Money has been the way it has sought to engage with stakeholders in the north-east and to understand the importance of Northern Rock not just to the employees but to the wider community in the north-east. It has put forward a business plan that seeks to focus its operations in Gosforth in a way that will help to protect and grow the operation there. That is why the news of Northern Rock’s sale to Virgin Money has been greeted positively by most people, but, sadly, not by those on the Benches opposite.

Luciana Berger: Earlier this year, UKFI ruled out remutualising Northern Rock on the grounds that that would represent the gifting of shares to members of a new mutual. Aside from the fact that mutuals are not premised on gifting, can the Minister explain how using £250 million of existing equity within Northern Rock to finance this deal is anything other than gifting?

Mark Hoban: The deal we have agreed with Virgin Money involves the receipt of £747 million in cash now and further receipts in the future. I think that offers much better value for money than the remutualisation route, which would have involved the free transfer of shares to members and would have had no certainty of return to the taxpayer. It is in the long-term interests of the Northern Rock business for this deal to go ahead as it is.

Alun Cairns: Does the Minister agree that this could be seen as the first step in returning normality to the banking high street after regulatory failure over the past 10 years? Does he accept that by doing that he is bringing a new, welcome innovator to the marketplace that will have a positive impact on competition?

Mark Hoban: My hon. Friend is absolutely right. We want to see new competitors in the market—people who can challenge the incumbents and offer a better service, better rates and better products—and that is to the advantage of consumers. That is a trend we are seeing across the banking sector as a whole, with new entrants coming into the market, and we should be encouraging it so that we have a more competitive financial services marketplace with better outcomes for consumers, whether they are business or personal.

Phil Wilson: Will the Government do an impact assessment of the effect on jobs in the voluntary sector if the Northern Rock Foundation closes after 2013?

Mark Hoban: I recognise the importance of the Northern Rock Foundation and I think we all appreciate the excellent work it does in the north-east, but following the denationalisation of Northern Rock it needs to think about how it will continue its work and how it will work with Virgin Money and Virgin Money Giving to continue its activities across the north-east in the future.

Philip Hollobone: What commitment has Virgin Money made to Her Majesty’s Treasury that it will increase lending to small businesses with its new asset in place?

Mark Hoban: At the moment, Virgin Money operates primarily in the retail financial services field. It offers a range of products to personal customers. However, it has said that it will look to provide a range of products to small businesses in the future and we would welcome that increased competition in that key area.

Chris Evans: Will the Minister please explain how using £240 million of Northern Rock’s own capital somehow represents a good deal for the bank and for consumers?

Mark Hoban: As I have already made very clear, Virgin Money is paying £747 million to the taxpayer, and other proceeds of sale will come our way. Our view is that this is far and away the best deal on the table. It is the best deal when it comes to value for money for the taxpayer, it is the best deal for consumers and the best deal for the north-east. I am sorry that the hon. Gentleman has not sought to welcome this opportunity to give the people of the north-east and those who work at Northern Rock some new hope for their future.

Stephen Hammond: I thank my hon. Friend for his statement. If I understand it, the deal done by the Labour party that forced Northern Rock to be sold before 2013 put a deadline in place, and if losses were being made the book value was more likely to fall. May I urge my hon. Friend to stick to his
	guns, as this is a good deal for taxpayers? I remind him that the Labour party’s timing meant that gold was sold at the bottom of the market.

Mark Hoban: My hon. Friend makes a good point. I am not sure I would ever want to turn to those on the Opposition Benches for advice on when to sell assets.

William Bain: Northern Rock demutualised in 1997 yet collapsed 10 years later. Does the Financial Secretary recognise that if it did so again, the cost to the taxpayer could rise to £10 billion? Why, then, did he not more rigorously pursue a mutualisation option that would have restored a safer building society mode of finance to the British high street?

Mark Hoban: We should think about those dates very carefully. It was demutualised in 1997 and failed in 2007. The hon. Gentleman needs to remember that the regulatory architecture put in place by the previous Government meant that Northern Rock could act as an outlier and become over-dependent on wholesale funding. Nobody did anything about that at a time when there was an asset price bubble in the UK economy. Those factors in the regulatory architecture led to some of the financial problems in the economy in 2007, 2008 and 2009. We are acting to strengthen the regulatory architecture, to tackle those problems and to ensure that the Bank of England has the powers it needs to supervise the banks properly and look at systemic threats to financial stability. We have also set up the Independent Commission on Banking, which is looking at ways of making the banking system in the UK safer while remaining competitive at an international level.

Jonathan Evans: My hon. Friend will recall that when he appeared before the all-party group for building societies and financial mutuals he was asked to arrange for the publication of the advice received in relation to UKFI and the start of this sale. Bearing in mind the reliance he has placed on advice today, when does he anticipate that advice being published?

Mark Hoban: My hon. Friend will understand from his own business experience that received advice can be subject to commercial confidentiality. I assure him that we looked carefully at the remutualisation of Northern Rock—that is why I went before his all-party group. We reached out to people in the mutuals sector who wanted to see the remutualisation of Northern Rock but, sadly, no one came up with a viable and workable plan to enable that to happen.

Andrew Love: I remind the Minister that UKFI made it absolutely clear at the start of the process that it was looking for short-term maximisation of the cash value of Northern Rock. That precluded any sensible mutual from entering the process. This deal is a disaster—we are losing money hand over fist on it. Would it not have been sensible in the circumstances, recognising market conditions, to have
	gone for a much longer-term deal with a mutual, which would have provided financial benefits as well as delivering benefits to the consumer?

Mark Hoban: I just point out to the hon. Gentleman that the mandate for UKFI was to maximise value for money for taxpayers, and that mandate was set by the previous Government.

Andrew Bridgen: Has the Minister noted that the deal agreed with Virgin Money represents 80% of the book value of Northern Rock, whereas RBS and Lloyds are currently trading at only 40% of book value? Does not the deal represent good value for the taxpayer?

Mark Hoban: My hon. Friend is absolutely right. If we measure this deal against the values at which other banks are trading at the moment, it is very clear that it is good value for money for the taxpayer. Rather than carping and criticising, Members on the Labour Benches should welcome the fact that at a difficult time for the global economy we have been able to sell Northern Rock and get such good value for money.

Nicholas Dakin: Has the Financial Services Authority expressed a view on the use of £240 million of Northern Rock’s own money by the buyers for the purchase of this scheme?

Mark Hoban: As I said earlier, the FSA will go through its normal process of approving the transfer and sale of this business.

Richard Fuller: Given the failed corporate strategy that led directly to the first run on a bank for more than 100 years, the nationalisation and now the capitalised loss for the taxpayer, is my hon. Friend satisfied that the original directors and chief executive officer of Northern Rock have been held sufficiently to account for their fiduciary responsibilities and will he welcome funding for the Serious Fraud Office to ensure that they are?

Mark Hoban: The directors of Northern Rock have been subject to enforcement action by the FSA, but I shall not go into detail about that. I recognise that the directors have their responsibility for the failure of Northern Rock, but the Labour party should also share some responsibility for the architecture of the financial regulation it put in place, which meant that no one was in a position to prevent Northern Rock from being an outlier when it came to its dependence on wholesale funding. It was a consequence of that dependence that led to Northern Rock’s being nationalised and we should welcome the fact that it is returning to the private sector.

Jonathan Ashworth: Will the Financial Secretary confirm, so that we are clear, that the Treasury did not apply to the European Commission for an extension of the 2013 deadline? Will he also confirm, further to his answer to the hon. Member for North West Leicestershire (Andrew Bridgen), that given the price of shares in Lloyds and RBS, the Government and UKFI have no immediate plans to sell off their shareholdings in those banks as well?

Mark Hoban: We were dealt a hand by the previous Government. We inherited their ownership of Northern Rock. We inherited their holdings in Lloyds and RBS. Our judgment was that this was the right time to sell the business. The deadline imposed upon us by the European Commission acted as a spur to this. Looking at the prospects for Northern Rock under state control and comparing them to the prospects for Northern Rock under Virgin Money’s control, most sensible people would say that it was better that Northern Rock was owned by Virgin Money than by the state.

Stephen Mosley: The employees of Northern Rock were cheering last week, but is this not also a vote of confidence by Virgin Money in the economy of the north-east and in the Government’s handling of the British economy as a whole?

Mark Hoban: That is right. We have a significant new entrant in the financial services market that is prepared to buy Northern Rock, to invest in the future of the operations in Gosforth and to provide job security there. It is a vote of confidence. It demonstrates that there are people out there who want to be part of our financial services market and who want to offer a good deal to consumers.

Gemma Doyle: Can the Minister guarantee that the Government will get back the £150 million that they are lending to Virgin and, if so, when?

Mark Hoban: What we put in place with Virgin Money is a capital instrument which is an important part of its financing structure, and the terms of that instrument will be set in place shortly. It is important to recognise that we want to see a well capitalised bank there. The FSA will look very carefully at the structure of Northern Rock and its ownership. As I said, Virgin operated a business model whereby it has capital levels which are much greater than those of some of its peers. That is a welcome sign that Virgin takes financial stability very seriously indeed.

Paul Blomfield: Is it any wonder that Members on the Labour Benches and people more widely question the value of the deal, when the principal purchaser says that he intends to sell out within a few years at double the money?

Mark Hoban: That is why we have agreed as part of the deal that if Northern Rock is sold within five years, we will get a benefit from that. It is not just those on the Government Benches who agree with the deal. It is the staff at Northern Rock, the Labour leader of Newcastle city council, the national officer of Unite and others who welcome the fact that this is a vote of confidence in the ability of Northern Rock to add value to the Virgin Money brand.

Jonathan Reynolds: Like my fellow Co-operative party MPs, I strongly wanted to see a mutual solution for Northern Rock. The Government’s reasons for not going down that route seem to change every time the issue comes before the House. The Government were happy to sell at a discount and use vendor financing, but are not those the very reasons why the Government used to say they could not proceed with remutualisation? Further to that, the Minister’s statement that “no mutual came forward with a bid” suggests that he does not really understand the issue at all. Surely the point of a mutual is that the members themselves would buy it out and become the owners.

Mark Hoban: I question whether the hon. Gentleman himself understands mutuals. There are situations where mutuals come forward and make bids. We have seen the consolidation of the mutual sector in recent years as a consequence of the financial crisis, so there are different ways in which a mutual option could arise. Let me reassure the hon. Gentleman and his hon. Friends. We looked closely at the mutualisation option, and we were open in reaching out to Mutuo, Adrian Coles, the Building Societies Association and Jonathan Michie to encourage them to come forward with a workable solution for how Northern Rock could be remutualised. No one came forward with such a solution. That is why this deal is the best one for the taxpayer.

Gareth Thomas: The Minister was asked at the all-party financial mutuals inquiry to publish in full the Deutsche Bank report to UKFI on the future of Northern Rock. Why will he not publish any of that report or any of the details of the other conversations that he says he has had with Mutuo and others? Does he not recognise that his failure to do so calls into question the seriousness of his commitment to financial mutuals?

Mark Hoban: I say this to the hon. Gentleman and other Members on the Opposition Benches who represent the Co-operative party: we have worked hard since we came into office to find ways to strengthen the mutual sector. That is why we have finally pushed through the legislative reform order which will make it easier for credit unions to expand, why we set up a fund in the Department for Work and Pensions to encourage credit unions to expand, and why we have pushed through, after years of inactivity by Labour when in government, a new capital instrument for building societies. This party is committed to diversity in financial services. We have done more to help the mutual sector in the past 18 months than the previous Government did before they left office. I believe we have a strong message on mutuals, and what we have here is the best outcome for the taxpayer and Northern Rock.

Housing Reform

Grant Shapps: Today, the Government have published “Laying the Foundations: A Housing Strategy for England”. The Government inherited a situation in which house building had fallen to its lowest peacetime level since the 1920s, house prices virtually doubled in the 10 years to 2010 and nearly 3 million households who wanted to own their own home and to have that sense of independence and pride were struggling to get a foot on the ladder. Indeed, under the previous Administration, the number of first-time buyers collapsed to its lowest level since the 1970s. Lenders are not lending, builders are not building and buyers are not able to buy.
	Of course, the credit crunch is responsible for some of the slow-down, but I have no doubt that the problem was compounded by a centralist and bureaucratic approach to housing that made it harder and more expensive to build those much needed homes. This Government will get Britain building again by working with communities and industry, not against them. Instead of forcing homes on communities, we are giving them reasons to say yes with the new homes bonus. Instead of dictating to industry, we are addressing the barriers it faces. We have already seen some promising signs—house building starts are up by a quarter during our first 18 months in office—but we are in no doubt about the scale of the challenges ahead and we are ready to take decisive action to get our country building again.
	To get builders building, we need to get buyers buying, which is why we are helping those who aspire to own. Today, I am announcing support for an industry-led indemnity scheme to provide help for first-time buyers in particular. It will help up to 100,000 people to buy new-build homes with a 5% deposit. That means that, instead of an impossibly high deposit of, say, £40,000, a typical first-time buyer would need only around £10,000 in deposit, putting ownership within the reach of the many. It is also a low-risk scheme for the taxpayer, with the deposit from the homeowner and the liability for the builder coming first.
	We are reinvigorating the right to buy. Nothing did more than the right to buy to promote social mobility, home ownership and mixed communities, but I am afraid that the previous Government made vindictive cuts to that successful scheme. We are on the side of every family who wants to get on and do well, so we will raise the discounts available to social tenants who wish to buy. For the first time, we will take the receipts from additional right-to-buy sales and use them to support new affordable homes on a one-for-one basis—for every home sold, a new one will be built.
	In the current tough conditions, direct support from the Government can get things moving again. Across the country there is a large number of what I describe as shovel-ready sites complete with planning permissions, but a lack of immediate support has stopped development in its tracks. Therefore, we are launching a new £400 million get Britain building fund. It is the injection needed to get building going and has the potential to support up to 32,000 jobs. [ Interruption. ] I hear chuntering from the Opposition Front Bench, but I can confirm that that money has not been raided from another budget. We all
	remember the previous Government’s habit of returning to the Dispatch Box to reshuffle money around. This is new money for the housing sector.
	Alongside that support, a new £500 million growing places fund will support the large-scale infrastructure needed for housing and economic growth. Today we are also providing £150 million, which I think the whole House will welcome, to bring many empty houses back into use.
	Of course, quality matters, not just quantity. That is why the new homes we are going to build will be well designed and meet high environmental standards, and why we have asked the Design Council to help advise on building better homes.
	The Government can also help by making more public land available, so we are freeing up public sector land with the capacity to deliver 100,000 new homes, many of those on brownfield sites. It is also time to recognise that many of the local deals struck during the height of the boom—the so-called section 106 agreements —placed unreasonable demands that simply do not make sense in today’s economic climate. It is quite right to ask developers to work with communities to make sure that development is viable, and no one has any objection to that, but it is self-defeating if the demands are so stringent that as a result there is no development, no regeneration, no community benefit and, ultimately, no houses are built.
	In addition, we will provide support for local areas that want to deliver large-scale new development to meet the needs of their growing communities, so we are putting the incentives in place. Alongside the new homes bonus, we are reforming the community infrastructure levy, so local communities will have a proper say over how their neighbourhoods are developed and improved.
	We are also supporting self-build, a revolution in the making, with a custom-build homes programme. We will put in place up to £30 million to fund this country’s ability to match what happens overseas and build many more homes through self-building by people who want to develop for themselves. Last year, the largest group of builders in this country was self-builders, with some 13,000 homes, and we want to see that figure double over the years to come.
	Rented housing continues to have a vital part to play in meeting our national housing need and supporting mobility, so we will work with local authorities to tackle the worst private rented properties and the worst private landlords who drag the reputation of the sector down. Satisfaction in the sector is 85%, and we want to see it grow.
	Members will know that we are reforming social housing, too. Under the previous Government, housing waiting lists almost doubled, so building more affordable homes is absolutely vital, and we are introducing the new affordable rent model, making sure that vulnerable people get the support that they need, while those who can pay, pay a little more and make a fairer contribution.
	It has to be easier for social tenants to move for work or to be closer to family, so we have just introduced the national HomeSwap Direct scheme, which will support them in their moves and create excellent mobility—in strong contrast to the failed scheme that no Opposition Member wants to talk about any more. One or two Members will recall it: it was called MoveUK, a scheme
	that the previous Government disastrously mishandled and, eventually, shut down. That was their idea of social mobility.
	We have introduced new flexibility to the tenancies that can be offered to new social tenants. When councils want to continue to offer lifetime tenancies, that is fine—if it is in the best interest of their tenants. When councils want to do something more flexible, they will have that flexibility in order to manage their stock much more effectively and to give hope to the millions of people languishing on the record waiting lists that have developed over the past 13 years.
	Today, I have also issued directions to the social housing regulator as a vital step towards putting all these various social housing reforms into effect. Alongside that, I am completely committed to protecting the most vulnerable and helping to prevent homelessness, and Members should be aware that I have established the first ever cross-ministerial working group, which brings together eight Departments and will help to solve the problems of homelessness.
	We have already published our first plan, which is in place and will help prevent street homelessness, with the “no second night out” nationwide pledge meaning that, for the first time in this country, nobody should ever sleep on the streets for a second night—[ Interruption. ] I hear the right hon. Member for Greenwich and Woolwich (Mr Raynsford) say that homelessness is going up, and he is right, but the reason why is that we no longer fiddle the rough sleeping count, which his Government resolutely failed to do anything about, even though people pointed out that it was preposterous to claim that there were only—get this—424 rough sleepers, as his Government wanted us to believe, in the entire country. It was untrue, and we are tackling the issue. I have reconvened the ministerial working group, and we are producing a second report—on ending homelessness—which can be expected in spring 2012.
	The measures in the housing strategy published today come from a Government who are committed to thinking in the long term about a stable housing market that works to the benefit of everyone. Taken together, these various different measures will provide a much needed boost for the housing industry, give 100,000 buyers the chance to own new properties and get their foot on the housing ladder for the first time, and lay firm foundations for housing growth in this country by creating the right legacy for future generations. I commend this statement to the House.

Jack Dromey: Housing matters. Good housing can make a world of difference to people’s lives, but bad housing harms health and holds back kids at school.
	Britain is gripped by a growing housing crisis. Does the Minister accept that he makes his statement on a day when the figures show that house building is down, homelessness is up, we have a mortgage market in which people cannot get mortgages, and rents are soaring in the private rented sector? Does he also accept that the extra £400 million to build only 16,000 more homes is but a 10th of last year’s cut to housing investment of £4 billion?
	Some of today’s announcements are not without merit. The mortgage indemnity scheme is something that we have called for and was pioneered by Labour in
	Scotland. However, the Government must get this right. So I ask the Minister: how many lenders have signed up to the scheme? On the sale of council houses, can he guarantee today that, for every house sold, one will be built? Will local authorities be able to keep 100% of the receipts from right-to-buy sales, and will the new council homes be let at the so-called higher, affordable rent linked to market prices? Does he not accept that we cannot have a combination of falling stock and rising rents when the need for good council housing has never been greater? The announcement on the use of public land is welcome. However, does the Minister agree that it is nothing new? Press releases from his Department about where such schemes are happening demonstrate that such things were taking place back in 2006 under a Labour Government. Does he accept that this is the fifth time that the same initiative has been announced?
	That goes to the heart of the problem. Today, much has been promised—much has been repeatedly promised—but, in 18 months under this Government, there has been a sorry saga of false dawns, failure and broken promises. The Minister boasted that he would beat Labour hands down when it came to house building, yet new homes are down 6% and housing starts are down 7%. Does the Minister accept his Department’s figures? The Prime Minister once said that homelessness was a disgrace and, together with the Minister, he committed to tackling the issue. Since the general election, homelessness has risen by 10%, yet under Labour, it fell by 70%. Does the Minister agree with Crisis that his policies will make that situation worse?
	The Secretary of State for Communities and Local Government has said that he wants to see more young families able to buy their first home, as he did. Yet research by Scottish Widows demonstrates that the average age of the unassisted first-time buyer will increase by seven years, from 37 to 44. However, one promise will be kept. When the Minister for Housing was the shadow Minister for Housing, he said:
	“it’s easy for a housing minister to catch your eye with a headline, but much harder to deliver more homes.”
	He has been true to his words. After 137 housing announcements, the facts are clear: on every measure, this Government are failing to deliver on housing. The contrast with Labour in government could not be more dramatic. There were 2 million new homes, including 500,000 affordable homes; 1 million families buying their own homes; 1.5 million social homes brought up to standard through the decent homes programme; and tenants’ rights were protected.
	Urgent action is needed now. Will the Minister accept that we should repeat the bankers’ bonus tax, so that we can build 25,000 new affordable homes and create 100,000 jobs for our young unemployed to kick-start the economy? Will he support our proposal for a 5% cut to VAT on home improvements, as that would mean that more homes were in a better condition?
	There is a human cost to this growing housing crisis: the damp flat where the baby is always ill; proud parents desperate because the kids they love cannot get a mortgage; small construction companies struggling to stay afloat; unemployed building workers desperate to get a job. Those people have had enough of false dawns, grand plans and press launches followed by broken promises and a failure to deliver. Sadly for them, a decent home at a price they can afford has never been further away than it is today.

Grant Shapps: I am very grateful to the hon. Gentleman for welcoming at least some sections of this policy—and, indeed, for laying claim to inventing some sections of it, I note from him and his colleagues in Scotland. When he says that these measures add up to £400 million in the get Britain building fund, he forgets that we have also announced £500 million for infrastructure projects; a multi-billion pound fund in the new homes bonus, and I do not notice any of his colleagues sending funds back to the Department as we distribute this year, we think, more than £400 million through that alone; and numerous other spending commitments, including the empty homes programme for £150 million—oh, and £4.5 billion to build more social and affordable homes. I am grateful to him for counting up the 137 measures, but it is a little disingenuous to take one of them and claim that that is the summary of the document. It is, as he rightly says, one of many measures.
	The hon. Gentleman asked some specific questions, so let me try to answer them. He asked how many lenders have signed up to the mortgage indemnity programme, and I can tell him and the House that 80% of lenders have done so. That is a good deal better than the scheme that many of us will remember from our time in opposition. The then Prime Minister came to this Dispatch Box and launched a scheme, and that was the first time many of the lenders who were supposed to be participating in it had heard of it. So yes, the scheme is being widely welcomed, and I am pleased that he is welcoming it himself.
	The hon. Gentleman asked whether the right to buy will be a one for one, and the answer is that it will. That is possible because of affordable rent and our having put that scheme together. [Interruption.] Opposition Members ask how. The simple answer is that affordable rent relies on money coming in from the private sector and from the housing associations to help to fund those homes. It is not simply the case, as with old-fashioned social house building, that the state is putting the money in. We have seen this work with affordable rent. That is why our programme to build 150,000 social and affordable homes was over-subscribed, and we are now producing 170,000 homes from it. We know that there is still latent demand in that programme, and we will use the receipts from the right to buy to make sure that we can build more.
	The hon. Gentleman mentioned homelessness, for which he says that the figures are higher. I want to challenge his figures. For one thing, the Council of Mortgage Lenders confirmed only last week that repossessions are lower this year than was projected—and, indeed, lower than the previous year as well. That is made possible by the record low interest rates that are possible only because we have managed to set out a credible plan to control the deficit. I should also point out to the hon. Gentleman, who has not been in the job for all that long—by the way, he is the eighth Labour shadow Minister I have faced—and will not have the track record to recall this, that there are fewer people in temporary accommodation this year than when Labour was in power.
	The hon. Gentleman rightly asks about the number of new homes and points out, rightly, I believe—there is no reason to doubt this figure—that 1 million new homes were built during Labour’s 13 years. He forgets to mention, though, that 2 million new people were coming into the country, so we ended up with a huge
	housing shortage. In any case, the net result in terms of social housing was a net reduction, with 200,000 fewer social homes.
	The hon. Gentleman mentioned Labour’s plan—it is, as far as I know, its only housing policy; we have spotted or detected no others so far—which is that old chestnut, the bankers tax. Forgetting that we have already raised the bank levy to £2.5 billion a year for 10 years, the Opposition want to raise this money again and to spend it, I have calculated, for the 10th time over. With it, they will produce just 25,000 homes. I suggest that he spends this evening and perhaps this week reading the document. These 137 measures go well in excess of 25,000 homes. VAT was the other big ask. To add to the debt when we have a debt crisis by lowering VAT would be economically inept.
	Finally, the one thing that has kept people in their homes more than anything else that any Government could do, as has been demonstrated in Italy, Ireland, Spain, Portugal and Greece, has been keeping interest rates low. This country’s plans to reduce the deficit have been received as credible, meaning that we enjoy all-time record borrowing levels. It is that which will help more people to own a home in the future.

Several hon. Members: rose —

Mr Speaker: Order. A large number of right hon. and hon. Members are seeking to catch my eye, which means that there is a premium on brevity, an object lesson in which is invariably provided by Mr John Redwood.

John Redwood: Will the Minister tell us what receipts he plans to get from all the sales that he has identified?

Grant Shapps: This is a large document and the receipts will come in many forms. The money that we are announcing for things such as the get Britain building fund will be recycled into building more homes, as will the money from the right-to-buy sales. I will write to my right hon. Friend with a more detailed note on precisely what we expect the receipts to be.

Nick Raynsford: May I draw attention to my interest as declared in the register? The Minister claimed that housing starts are up by a quarter under this Government. The opposite is true. In the past 12 months, the number of new homes started in England is below 100,000 and is 7% lower than the level over the previous 12 months. As the Minister has such a tenuous grip on what is actually happening in the market, why should we believe a word that he has said today?

Grant Shapps: I am sorry to have to challenge the right hon. Gentleman on this issue, but housing starts are up by 24% under the coalition compared with the comparative period under Labour. I have the figures here for each quarter. I will not stretch your patience, Mr Speaker, but I will happily drop the right hon. Gentleman a note on those figures. If one compares the period that we have been in office—roughly 18 months—with the same period before, housing starts are up by 24%.

Simon Hughes: I welcome the statement warmly. Will the Minister assure me that his Department is continuing to talk to the Treasury about further incentives to ensure that land that is held sterile because developers will not develop it is brought back into use for housing, particularly in urban areas where it is needed?

Grant Shapps: I can definitely reassure my right hon. Friend that that is exactly the intention of our housing strategy. A number of our recommendations and policies will lead to that conclusion. It is important to get work moving on land that is available, particularly where planning permission has been granted. That is exactly what we intend to do.

Jeremy Corbyn: Some 30% of constituents in my inner-London constituency live in private rented accommodation without security of tenure and with very high rents. Many of them are threatened with eviction because of the Minister’s changes to housing benefit. Does he not think that it is important to bring about real changes in the private rented sector by giving longer-term tenancies at fixed rents, and at the same time to deal with the problem of homelessness in London by building more council housing as quickly as possible?

Grant Shapps: I agree with the hon. Gentleman that the answer to many of these problems is to build more homes. That is why “Laying the Foundations” puts such a big emphasis on that. He might also be surprised to hear that I agree with him that we need to ensure, as the private rented sector has expanded from 8% to 16%, that the quality is of a sufficiently high standard. I will be doing more work on that in the coming months and will report back. I should also say to him that satisfaction levels in the private rented sector are about 85%, which compares favourably with the social sector, where the satisfaction level is 81%. I take his points and will certainly reflect on them.

Stewart Jackson: I warmly welcome my right hon. Friend’s strategy and statement. In particular, I welcome the mortgage indemnity scheme and the undertaking to produce guidance and regulations on housing allocations for armed service personnel from December 2012. May I impress upon the Minister that there must also be assistance for local housing authorities that want to prioritise in their housing allocation those with a local link, poorly paid workers and those who make demonstrable efforts to improve their community?

Grant Shapps: I can tell my hon. Friend that I have today issued new directions to the social regulator that cover each of the points that he has raised. In particular, I know all Members will join me in the belief that it is essential that this country properly and correctly honours the sacrifice of those who have been out and fought for this country. That is explicit in the new directions, as is much more flexibility to take into account, for example, whether somebody is working, and whether that should be considered a positive attribute in gaining access to social housing.

Diana Johnson: A year ago today, the Government axed a £160 million
	scheme to build new houses in my constituency to rent and buy. Will my constituents see the benefit of any of the money that has been announced today?

Grant Shapps: I think that is a reference to the housing market renewal areas. [Interruption.] Perhaps the hon. Lady would like to drop me a note, because I may have misunderstood which funding she was referring to, and then I will be very happy to respond in detail.

Alok Sharma: The new homes bonus has been welcomed by councils up and down the country that are delivering new house building. Does my right hon. Friend agree that incentivising local communities and councils in the right way is absolutely the right approach to deliver new house building?

Grant Shapps: That is right. More than 40% of local authorities report that the new homes bonus is making it easier to propose and introduce new housing in their local areas, which is very important. Last year, nearly £200 million of new homes bonus was paid out, and this year we expect to pay out more than £400 million. Incidentally, there will be a boost of another £19 million for the affordable social housing that has been included in the scheme. That approach is very important indeed.

Sheila Gilmore: The Minister has made it clear that the one-for-one promise on council house sales appears to depend on higher rents. How does that square with the Government’s intention to keep housing benefit down?

Grant Shapps: As with the general affordable rent programme, what will typically happen is that people will be brought out of the private rented sector and into the affordable rent sector. Rather than paying 100% rent, people will be paying affordable rent, which in London, for example, is just 65%. That does indeed keep the pressure on housing benefit down.

Nigel Adams: Will the Minister explain at exactly what stage the taxpayer will become liable under the mortgage indemnity scheme should there be a default on a mortgage?

Grant Shapps: Yes, I certainly can tell the House a little more about the mortgage indemnity scheme. It has principally been worked up by the Council of Mortgage Lenders and the Home Builders Federation. They had hoped to produce it on their own, without Government backing, but that was not possible.
	First, the home buyer will put down a deposit of at least 5%. That is the first chunk. Secondly, the home builder will put money into an indemnity fund. It will stay there for seven years, and they will not be able to touch it. They will get it back after that period. Only after those two mechanisms have failed will the Government step in to back the mortgage. Lenders will pay a fee to be part of the scheme as well, so overall we believe it will be excellent value for money for the taxpayer.

Austin Mitchell: Is this not going to lead to two-class housing development? For those who can afford to buy, which is to say the first
	class, there will be subsidies and support. For those who cannot, who are a large proportion at current prices, the choice will be either council and social housing, which will be treated like a transit camp and will shrink as it is flogged off at knock-down prices, or a private rented sector that is unregulated and in which there is no security of tenure, rents will be rising and housing benefit will be cut. Is not the only answer to build more public housing for rent?

Grant Shapps: I am sorry, but I think the hon. Gentleman has misunderstood some of the principles behind the scheme. Unlike when the previous Administration were in office, we are not going to have declining social housing stock. We are going to build one-for-one replacements for every home that is sold through the right to buy. Of course, he is right that there are different types of housing for people who purchase and those who rent through intermediate rent, affordable rent and social housing. That is why we are proud to have put £4.5 billion to date, before this housing strategy, into building more affordable and social homes in this country.

Sarah Newton: The 20,000 people living in Cornwall and waiting for a home to rent will welcome today’s news. Does my right hon. Friend agree that villages and towns in my constituency and across the country should get a plan in place now, so that local people decide the number of type of houses that their communities need?

Grant Shapps: I absolutely agree with my hon. Friend, who is right that all our plans, including the national planning policy framework, the Localism Act 2011 and the housing strategy document, lead towards local communities having far more say. Of course, the first thing that they should do is set out their own plans with their local population.

Joan Ruddock: Will the Minister accept that, in an area such as Lewisham, where there are below-average incomes, a lot of unemployment and very high house prices, finding a deposit of £10,000 is absolutely impossible? What time frame would he put on housing the 17,000-plus families in my borough of Lewisham into affordable and decent homes?

Grant Shapps: The only answer for the right hon. Lady’s constituents is for us to build more homes and to get a more flexible, dynamic and mobile housing market in this country. She is absolutely right, and I have every sympathy with her constituents. Throughout London, the average deposit is something like £60,000—it is completely unattainable. However, I hope she will join me and—I think—her Front-Bench colleagues in welcoming the indemnity scheme, which means that from now on, deposits will come down to £15,000 from £60,000.

Bob Russell: Bob the builder welcomes this statement. It is a statement of fact that the previous Labour Government in 13 years built fewer council houses than the Thatcher Government achieved in 10 years. The Minister has said that the Government can help by making more public land available, but will he
	specifically consider sites such as Severalls hospital in Colchester, which the previous Labour Government left to rot for a duration greater than that of the combined total of two world wars?

Grant Shapps: My hon. Friend is absolutely right about our burning ambition to ensure that we out-build—in social houses as well as in houses generally—anything that happened in the previous decade or two. He is also right that building on public sector land is an ambitious programme. I can update the House by saying that we have identified sufficient land for about 82,000 homes so far. That is without going through all Government Departments and arm’s length bodies. Indeed, we have not gone through the smaller sites—those for less than 40 homes—that could be used fruitfully to build houses. I am not familiar with the site that my hon. Friend has mentioned, but I would be very happy to discuss it with him.

Michael Meacher: How can the Minister justify encouraging home buyers to raid their pension pots to pay down their deposit, which would be a reckless running down of limited pension savings for retirement? Will not mortgage indemnification lead to losses of millions for taxpayers when home buyers are forced in their thousands to default as a result of prolonged and deepening recession and rising unemployment?

Grant Shapps: I do not see it that way at all. For a start, it is not clear that people who are saving for a deposit are at the same time using the same money to save for the pension funds, as the right hon. Gentleman has described. Secondly, it is obviously a lot easier to save £8,000 or £10,000 than to save £35,000 or £40,000, which is the average deposit today, so I do not think that what he says is true. We do not think that the Government will be widely exposed through this scheme for the reasons that I have already described—I will not labour the House by describing them again.

Jeremy Lefroy: In Stafford, we have more than 500 long-term empty houses, which has been the number for many years. I welcome the announcement of the £150 million, but will the Minister kindly advise us when that will be forthcoming and how it can be applied for?

Grant Shapps: I am pleased to let my hon. Friend know that in addition to the £150 million in the housing strategy, which will be delivered quickly—the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell) has been working on that scheme and will announce more shortly—we have delivered, through the new homes bonus, which Opposition Members often deride, 16,000 empty homes in just one year back into proper use.

Stephen Pound: The Minister will be aware that today the right to buy involves not the Parker Morris street freeholds—they are long-gone—but high-rise, tower-block leaseholds. What steps is he taking to warn potential purchasers of such leaseholds that they will incur considerable and significant future costs for management, maintenance and structural work?

Grant Shapps: The hon. Gentleman makes a reasonable point. There have been issues for leaseholders, and I spend much time considering that and working with them. Each of us tends to characterise what we think is left of the social housing stock—by the way, there are 4 million social homes, nearly 1.8 million of which are in the council and ALMO sector—and to think that the homes that we know are representative of them all. In my constituency, by and large we have street houses rather than tower blocks. Around the country there remains great diversity in the sorts of homes available, and I am sure that the renewed right to buy will be really popular.

Anne Main: I welcome much in my right hon. Friend’s statement, but I have concerns about how the indemnity scheme will work. In an area such as St Albans, which is ringed by green belt, which does not have shovel-ready sites but which does have high house prices, what hope can he give to constituents of mine who would like to access the starter homes that are old period houses? We will not build loads of brand-new starter homes in an area such as St Albans.

Grant Shapps: My hon. Friend and I share a boundary between St Albans and Hatfield. That area used to be an aerospace site and is now available for quite a lot of house building, but that aside—I make no apology for this—we consider it important that we focus our efforts on building new homes. Every home built supports two jobs, which is important for employment and gross domestic product growth. We are therefore focusing on new homes, not just for first-time buyers but for anybody who wants to buy a new home.

Hazel Blears: The Minister and the Secretary of State will be well aware that the people of Pendleton have been waiting many months for the conclusion of their £150 million private finance initiative project, which will result in 800 new homes, 1,200 refurbished homes and hundreds of construction jobs. When will the Minister sort this out? The people of Pendleton need hope for the future, and if he could do it in time for Christmas, it would be extremely good.

Grant Shapps: The right hon. Lady has been a doughty champion for her residents, and it will not be too long before I can deliver further news.

Richard Graham: I welcome the Minister’s announcement, particularly on his indemnity scheme, which will stimulate the housing market in general and, more specifically, accelerate sales for the development of Kingsway in Gloucester, triggering badly needed infrastructure, such as a new surgery. Does he agree that the growing places programme is well suited to resolve section 106-related hold-ups to brownfield site developments, such as the one at the former Van Moppes chemical site on the Bristol road, which he visited with me some time ago?

Grant Shapps: My hon. Friend is absolutely right. Between the growing places fund and the get Britain building cash announced today in the housing strategy, there is ample room to get some of these stalled and stuck sites, such as the one which I visited in his constituency, building again.

Andrew Love: I want to press the Minister on the one-for-one policy: the Government are increasing the discounts to 50%, and in return the affordable rent policy is meant to make up the difference. Will he guarantee the one-for-one policy? If it does not happen, what action will he take?

Grant Shapps: I would not have the confidence in this policy had we not already launched the affordable rent programme and discovered that it was over-subscribed. So we already have the contacts with councils and housing associations saying, “We want to do this, and we have a site to do it”. However, the Government did not have enough money to allow it to happen. We know from the size of the receipts that we will have sufficient money left over, after paying down the housing debt, to replace on a one-for-one basis.

David Nuttall: I remind the House of my interest in the Register of Members’ Financial Interests. Does my right hon. Friend agree that a central plank of any housing strategy must be a thriving and vibrant private rented sector, which should not be restricted by even more regulation, as suggested by the Labour party?

Grant Shapps: The private rented sector is absolutely vital, as my hon. Friend suggests. One of my predecessors, whom I shadowed, suggested putting rent controls back in place. However, it is instructive to consider that when rent controls were in place, the private rented sector shrank from more than 50% to just 8%. Once they were removed, it doubled back up to 16%. It is important not to burden the private rented sector with too much red tape. Having said that, however, it is also important to ensure that the quality is sufficiently high, as I said a few moments ago, and we will be doing more work in that regard.

Alison Seabeck: I make my usual declaration of an indirect interest. I received an e-mail this morning from the Minister for the Armed Forces that listed the Ministry of Defence sites in my constituency that were going into the public land pot. I made some inquiries, and the Minister should hear the answer to them. The MOD is slowing down the submission and is in no hurry to bring forward development on the site. Indeed, it is acting completely against the e-mail from the Minister for the Armed Forces, to the extent that we are now considering removing the housing element of that site. Does the Minister have any certainty that his Government’s left hand knows what their right hand is doing on this?

Grant Shapps: I am grateful to the hon. Lady—my seventh shadow Housing Minister—for making that point, which I would be happy to look into in more detail. The instruction to ensure that government land is properly used and distributed for housing has come straight from No. 10, and I will ensure that I follow up on that request.

Andrew Selous: I draw attention to my declaration in the Register of Members’ Financial Interests. May I encourage my right hon. Friend to keep putting families at the front and centre of his policy? More than 15% of UK families
	face over-burdensome housing costs, and many couples are putting off having children because of the high cost of housing.

Grant Shapps: My hon. Friend is right, and today’s housing strategy is very much about putting the family front and centre. We have already done a number of things, such as scrapping the density targets, which led to too many flats and not enough family homes. Today’s announcement, and in particular the mortgage indemnity, will be widely welcomed by families across the country.

David Hanson: Hansard will show that the Minister was clear that this is new money, rather than recycled money. If that is the case, will he say what the consequential is for Wales, Scotland and Northern Ireland, otherwise we might believe that the money is perhaps not new but recycled? Secondly, are builders in the indemnity scheme building simply in England rather than nationally?

Grant Shapps: On the first point, the Barnett consequential formula will apply, which means £400 million for England. On the second point, there will now be discussions with the devolved Administrations to see whether they are interested in the indemnity scheme.

Geoffrey Clifton-Brown: I draw the House’s attention to my entry in the Register of Members’ Financial Interests. I welcome my right hon. Friend’s announcement this afternoon of measures to reduce the 738,000 empty houses, which are a shocking waste of our built environment. Can he say what effect he thinks that those measures will have? He might also be interested to know that there were as many empty houses at the beginning of the 13 years of Labour Government as there were at the end.

Grant Shapps: I am grateful to my hon. Friend for that second statistic, of which I was not aware. Those empty houses are indeed a scandal, no matter who they have remained empty under. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove will lay out more details of the new, enlarged fund to tackle the empty homes. It is important that we tackle them not only through some of the traditional methods, but by taking people who may be unemployed and reskilling them, using apprenticeships and much else, to ensure that we bring as many homes as possible back into use.

Graham Jones: Satisfaction among people in the private rented sector is certainly way below 85% in my constituency. The Minister talks a good game about the private rented sector and tackling some of the worst rented properties. However, may I remind him that he is the Minister who rolled back regulation on houses in multiple occupation, did away with Labour’s register of private landlords and is about to introduce a universal credit direct payment to landlords, none of which will help my constituents in poor housing? Can he give me some examples of what he will do to deal with the private rented sector in the next year?

Grant Shapps: Yes. I have had a good look at the range of powers available to the hon. Gentleman’s local authority, and I hope that he will join me in ensuring that it is properly using them to ensure that tenants in the private rented sector are getting a better deal. I know that his work, joined with mine, will help to make their lives a lot better.

Mark Field: I fully support what the Minister has said about aspiration and today’s first-time buyers taking advantage of something that he and I—as almost-baby boomers—took for granted. However, does he understand some of the unease about the idea of using potentially billions of pounds for a Government guarantee in this area? At what point does the inflated housing market have to fall for that to come into play?

Grant Shapps: I am grateful to my hon. Friend for describing me as part of the baby boomer generation. As I have described, this is not a multi-million pound exposure for the taxpayer. In actual fact, a number of things have to happen before the taxpayer experiences any loss—not least because the lenders are paying for the scheme, because the people building the homes are paying into a pot and, of course, because there is a deposit that has to be paid first. We are carrying out a wide range of modelling, which we will release shortly as part of the consultation for the scheme. I know that my hon. Friend will take a great deal of interest in those numbers.

Ian Mearns: The Minister may be aware that my borough of Gateshead already has significant unmet need, and we anticipate that something like 6,000 households will be forced to seek alternative accommodation when the housing benefit changes kick in. Will the Minister guarantee that to tackle this impending crisis, Gateshead will get more than the £68,000 new homes bonus that we got last year?

Grant Shapps: In many ways, it is entirely in the hands of the hon. Gentleman and his local authority. The more homes that are built, the more money that will flow. We have made the system disproportionately advantageous to local authorities with lower-than-average council tax banding, because we have used the national average, which favours authorities with below-average rates.

Iain Stewart: Is my right hon. Friend aware that the National House-Building Council, which has its headquarters in my constituency and celebrated its 75th birthday last week, has widely welcomed this package of measures? In particular, it thinks that the indemnity scheme will go a long way to unlocking the supply of mortgages.

Grant Shapps: I am grateful to my hon. Friend for pointing that out. The NHBC is important, as it guarantees the quality of new homes with its own insurance scheme. Clearly, if the indemnity scheme is to work, it will require all the different partners in the sector to work with the NHBC. I am grateful for its comments and for my hon. Friend’s.

Stephen Gilbert: As possibly the only Member to have been elected last year while still living at the hotel of mum and dad—[Hon. Members: “Aah”]—I welcome much that is in this ambitious document. I want to press the Minister on land disposal. How much public land has been identified by the Government and what impact will below-cost disposal have on the assumptions in the comprehensive spending review?

Grant Shapps: I am sure that my hon. Friend will be delighted with the indemnity scheme—or perhaps he has missed the boat already. The public sector land disposal programme has, I think, identified 83,500 potential plots, and I should add that that comes from only five different Departments. We still have arm’s length bodies, there are still the other Departments and plots with fewer than about 40 homes have not been taken into account at all, so we are confident of being able to go a lot further. My hon. Friend asks about the receipts. The simple answer is that if these pieces of land are not being used and are unlikely to get used under the current programme, things such as build now, pay later scheme can unlock the land and improve the profile of receipts to the Treasury and taxpayer rather than worsen them.

Martin Vickers: The Minister will be aware that as a result of changing shopping patterns, many of our towns have boarded-up empty shop properties, many of which are substantial buildings that could easily be brought back into housing use. Will he explain what plans he has to do that? In the case of my constituency, this would provide a better and more attractive environment for the town and attract more visitors, which would boost the tourist trade.

Grant Shapps: I appreciate that there might be times when the mix is wrong. Having said that, we want to ensure that we do not destroy vibrant potential business areas. I confirm that we are looking at use class orders, for example, and we will have more to say about that shortly.

Oliver Colvile: I declare my entry in the Register of Members’ Financial Interests. Will my right hon. Friend spell out what he proposes to do about the misuse of tenancies?

Grant Shapps: My hon. Friend is right to mention the misuse of tenancies. There is considerable detail in the proposals about some of the plans that we intend to take forward. Housing fraud and abuse cost this country something like £5 billion to £10 billion a year. That covers everything from high-income, six-figure-salaried tenants taking up council housing that is meant for vulnerable people to people sub-letting homes when they already have their own home and people getting homes even though they have a home here or somewhere else. There is a wide range of abuse, and my hon. Friend will be pleased to see some of the detail in our housing strategy.

Andrew Percy: I feel that I should declare that I do not have an interest.
	During my 10 years as a city councillor I observed that the top-down approach helped to slow down house building in many areas, and I therefore welcome the
	proposed changes. I particularly welcome the commitment to build more social housing, which is much needed in my part of the world. However, may I press my right hon. Friend on the section 106 reforms? During my time as a councillor, I observed that section 106 could deliver some very good community benefits, but that it could also hold up developments. Will my right hon. Friend assure us that when there is development in a local community, that community will benefit from it in some way?

Grant Shapps: I think it enormously important for communities to benefit, and I know that Members in all parts of the House share my view. The community infrastructure levy, the new homes bonus and, indeed, section 106 all play their part in that. What concerns us, however, is that some of the deals negotiated during the boom times are now preventing developments from going ahead. It is better to have housing than to have no housing, so we are inviting people to take part in “pre-April 2010” negotiations in order to unlock some of those sites.

Peter Bone: The Minister has been very good at the Dispatch Box today, just as he was very good in the radio studios this morning when he was grilled by journalists. Is it not a shame that he did not make his announcement to the House first?

Grant Shapps: As you will know, Mr Speaker, I issued a written statement at 9.30 am in addition to my oral statement. However, my hon. Friend is right to point out that we deplore those who deliberately leak Government policy. Such leaks often happen because, in the case of documents such as this, it is necessary to work with third parties—there is no way round that. We always encourage them not to send out details of what is inside the documents, but unfortunately we are not always successful.

Alec Shelbrooke: My constituents will be overjoyed about the document tonight, not least because it will take the pressure off greenfield sites all over my constituency. Thousands of permissions have been granted on brownfield sites in Leeds. Does my right hon. Friend agree that the document gives developers nowhere to hide, and that those brownfield sites need to be developed?

Grant Shapps: I look forward to visiting my hon. Friend’s constituency, where people will no doubt be dancing in the streets this evening. Local authorities and local people must make delicate decisions about where it is right to build and where they do not want building to take place. The Government are proud to have returned those powers to local communities. That is absolutely the right place for them, as the housing strategy confirms.

Amber Rudd: I particularly welcome the release of public sector land to boost housing construction, but will the Minister assure me that the build now, pay later scheme will mean that taxpayers have an IOU ensuring that, when the houses are eventually sold, they will get the money back?

Grant Shapps: Yes, I can give my hon. Friend that assurance: obviously the taxpayer must get the money back in the end. Indeed, I can go one step further in saying that we will impose conditions on how quickly developments are created and houses are built. We can get things moving faster by using that mechanism.

Jason McCartney: Given that there are 11,000 long-term and short-term empty properties in my Kirklees council area and 350,000 empty properties in the country as a whole, does my right hon. Friend agree that, while today’s announcements are welcome, we need to give councils and communities greater incentives to bring those empty properties back into use?

Grant Shapps: That is absolutely true. Without putting too fine a point on it, it is a scandal that 700,000 or 750,000 properties are empty when so many people are in desperate housing need. As the hon. Member for Birmingham, Erdington (Jack Dromey) has rightly pointed out, the housing strategy takes account of all the decisions that have been made to date and then presents new proposals. We concluded that we wanted to add another £50 million to the £100 million fund for empty homes that already existed. We shall certainly want to work with my hon. Friend’s local authority and indeed with everyone else, including social enterprises, to ensure that those empty homes are returned to use.

Robert Halfon: I refer Members to my entry in the Register of Members’ Financial Interests.
	Will my right hon. Friend confirm that, under the reforms, housing money raised in Harlow will be spent in Harlow, and that we really will have Harlow housing money for Harlow people?

Grant Shapps: Our intention is to ensure that where there is demand, we can create the housing. The money will cease to be transferred via the centre and then be paid out again. That is what has happened for many years through the housing revenue account, but we are reforming that system. We have confirmed that today in the housing strategy, and as a result about £30 billion of debt will be reallocated around the system and in future be spent locally.

Annette Brooke: How will the Government monitor whether their welcome promise to build a new social home for every one sold under the right to buy is fulfilled, and how will they ensure that if there is a clear and overwhelming need for family homes, the new properties will not be two-bedroom flats?

Grant Shapps: My hon. Friend is right that we must know what is going on with these sales, and I will set that out in more detail in a further document shortly, so she will be able to study the details and provide feedback.
	Broadly, we know where a house has been sold, so it is not too difficult to track that money and make sure that another property is built, and we will ensure that that happens.

Andrew Bridgen: My constituency has a huge interest in there being a healthy house building industry, as we are home to not only many large and small construction companies, but many companies that supply materials to the house building sector, including the largest brick factories in the country. Does my right hon. Friend agree that our newly unveiled housing strategy will start to transform opportunities for hard-working people in North West Leicestershire and across the country?

Grant Shapps: I am grateful to my hon. Friend for his question, because he is absolutely right. Lenders are not lending; builders are not building; people cannot buy; and the whole construction industry supply chain has effectively ground to a halt. This strategy is designed to deliver precisely what he has called for. We want to make sure that jobs are created again in those sectors to support more house building in this country.

Stephen Mosley: May I press my right hon. Friend a little further on a question that he answered a few moments ago? He said new houses will be built on a one-for-one basis. Will they also be built on a like-for-like basis, so that, for instance, if a three-bedroom family home is sold, it will be replaced by another three-bedroom family home, not a one-bedroom flat?

Grant Shapps: My hon. Friend will recognise that some of the homes in question will, of course, have been built a long time ago, and current housing needs might be different from what they were in the past. That can work in both directions, as it were, and I will consult on the best way to implement this measure, as there is no point in building homes where they are not required. For instance, people might want to buy homes in an area that is currently experiencing depopulation, so there is nobody on the waiting list who wants a new home there. We will examine such issues very carefully, and I will welcome my hon. Friend’s comments in the consultation.

Marcus Jones: I am encouraged by the success of the Firstbuy scheme, which is helping many first-time buyers get on to the housing ladder, and I am sure that the new build indemnity scheme that my right hon. Friend has announced today will be equally successful. Can he tell the first-time buyers in my constituency when that scheme will be up and running?

Grant Shapps: We aim to have the scheme in place by spring next year.

Points of Order

Hilary Benn: On a point of order, Mr Speaker. Once again, a major policy announcement from the Department for Communities and Local Government has appeared in the newspapers before a statement has been made to the House. I refer in particular to the report on the Financial Times website on Saturday 18 November on the details of the mortgage indemnity scheme, and the front-page report in The Times of the same date about both the mortgage indemnity scheme and right-to-buy discounts. Mr Speaker, you have been consistently clear that statements about policy should be made to the House before they are made anywhere else. What can now be done, given that this is the third occasion when that has not happened in respect of a policy statement from this Department?

Eric Pickles: rose—

Mr Speaker: Order. Before I respond to the point of order, the Secretary of State is seeking to catch my eye, and I shall listen to him.

Eric Pickles: Further to that point of order, Mr Speaker. I want to give an assurance to you, Mr Speaker, that what appeared in the Financial Times and The Times on Saturday was not authorised by my Department or by any other Department. As my right hon. Friend the Minister for Housing and Local Government has explained, putting together policy statements necessarily involves talking to third parties, and it is a matter of some considerable regret that this information was released before we intended. It was our intention to release everything today.

Peter Bone: Further to that point of order, Mr Speaker. We regularly saw
	leaking under the previous Government, which was wrong, and I thought that things were going to be put right. Leaks may occur, but that does not explain why Ministers appear in the media and are grilled by journalists before they come to this House. I wonder whether that can be looked at.

Mr Speaker: I am grateful to the hon. Gentleman, the Secretary of State and the shadow Secretary of State for the point of order. Let me respond as follows. I was interested but concerned to hear the Minister for Housing and Local Government explain the position by saying that, though regrettable, it was not his doing and that those entrusted with the information had let it slip. It is not, I am afraid, a satisfactory excuse for a Minister of the Crown to say, “It wasn’t us but those to whom we gave the information.” Ministers are going to have to think rather carefully about the people to whom they entrust information in future. If they cannot be confident that the confidence will be respected, perhaps they ought not to divulge the information. I know that in these circumstances there is a tendency, particularly among old hands, for there to be a certain amount of smirking on the Front Bench but, frankly, it is not good enough—it is a rank discourtesy to the House of Commons and an abuse of Parliament. That is the reality. I deprecated this under the previous Government, but what happened in previous decades or under earlier Governments does not concern me. What I am concerned about is trying to bring about an improvement now.
	Secondly, I say in respect of the point made by the hon. Member for Wellingborough (Mr Bone) that Ministers of course must make judgments about when they appear in the media, but they certainly should not allow themselves to be drawn into the pertinent matters that are to be addressed in the statement. If they now and again felt able to restrain themselves from appearing in the media until after they have addressed the House, I doubt whether either they or the nation would suffer.

Intelligence and Security Committee

[Relevant documents:  The Government’ s Response (Cm 8168) to the 2010-11 Annual Report from the Intelligence and Security Committee is relevant. The Justice and Security Green Paper (Cm 8194) is relevant in so far as it relates to the Intelligence and Security Committee.]
	Motion made, and Question proposed,
	That this House has considered the matter of the 2010-11 Annual Report from the Intelligence and Security Committee (Cm 8114).—(Mr Dunne.)

Malcolm Rifkind: I am privileged, as Chairman of the Intelligence and Security Committee, to introduce this debate on not only the Committee’s annual report but the work of our intelligence agencies over the past year. It has been a particularly interesting year, in which we have seen a sea change in our intelligence agencies and the role that they play in the public debate of the nation: not only has the Justice and Security Green Paper been published by the Government, but only last week the Foreign Secretary, for the first time in our history, gave a lecture on the record—a public lecture—on the role of intelligence in foreign policy; over the past few months, the heads of the various intelligence agencies—the Secret Intelligence Service, the Security Service and GCHQ—have either given lectures or been interviewed on television or in the press about the work of their agencies and the role of intelligence; and the Intelligence and Security Committee has said in its annual report that we look forward to having, at least on one or two occasions, public sittings, for the first time in the history of the Committee, and we know that the Government see that to be appropriate. The fundamental reforms that we will be discussing today on the nature of the Intelligence and Security Committee and on the wider question of intelligence oversight mark a fundamental departure from the practices of the past.
	Some might be entitled to ask, “Does this mean that secrecy is not as important as it used to be?” They might suggest that our secret services do not have to be as secret and that the secrets themselves do not require the same protection. Anyone who had that view would need correcting quickly and comprehensively. Of course there are secrets, and the basic role of these agencies is to carry out secret activities on behalf the nation as a whole.

Keith Vaz: I welcome what the right hon. and learned Gentleman has said about this important matter. When the Select Committee on Home Affairs has sought evidence from the head of MI5 in the past, we have had to travel to its headquarters for a private briefing, sometimes with darkened windows. I welcome what he said about the fact that the heads of those agencies will be giving evidence to his Committee in public so that they can be cross-examined. Does he know when the first such sitting might be?

Malcolm Rifkind: The heads of the agencies have been travelling to the Intelligence and Security Committee to give evidence—albeit in secret, not in public—for a good number of years, so precedent is not being broken. Some thought is being given to holding public sessions,
	and I certainly hope that will prove possible over the next few months. I cannot give an absolute commitment to that effect, but it is certainly what I would expect.
	The nature of secret operations remains as crucial as ever. A much more mature approach is being taken to what Britain needs to remain secret and what is a legitimate question of public debate, even if the intelligence agencies are involved. When I first entered this House, and right up until the 1990s, the very existence of the intelligence agencies was never officially declared or admitted and those who led the agencies were very private figures whose identities were never revealed. Much has changed since enactment of the Intelligence Services Act 1994, but to this day some aspects of that approach remain very much in our eye. The question that must be asked is whether that is acceptable in a modern society. We have three intelligence agencies that collectively receive some £2 billion of taxpayers’ money each year. That is serious money that inevitably needs not only private scrutiny but a degree of public scrutiny, too.
	Secondly, the very fact that they are secret agencies in an open society means that there is a need for Parliament and the public to take a serious interest not only in the private but, where possible, in the public way in which the agencies operate. Of course, there is a third consideration, which is that as the very activities of the agencies involve the power to intercept communications or carry out operations that, without the authority of a Secretary of State, would be unlawful, they have a privilege that is not available to the rest of the community. If one thinks that this debate is taking place in the middle of a hacking inquiry when exactly that kind of interception was carried out by those who did not have lawful authority, one can see a clear illustration of why the needs of the agencies should be subject to a degree of transparency.

David Winnick: The Chair of the Committee mentioned that before 1994, there was no debate—or at least no acceptance and acknowledgment by the Government of the day—of the security services. Does he accept that during the 1980s some of us pressed for parliamentary scrutiny and used every opportunity in debates to say that there should be such scrutiny by Members of Parliament?

Malcolm Rifkind: I not only acknowledge that but can say that both the activity of the hon. Gentleman and many representations from other hon. Members and those outside this House led in the 1990s to the Government changing the situation. I was Defence Secretary at the time and was involved in the discussions within Government that led to the 1994 Act, which set up for the first time the independent oversight machinery. We are now trying to discuss and consider the radical modernisation of that machinery, which has existed since 1994.
	It is worth also making the general point that at the end of the cold war there was a debate about whether we still needed intelligence agencies and whether they needed the funding, powers and resources they had been allocated during the cold war. The famous phrase about its being the end of history was quoted at that time. I have always been sceptical of that phrase; I prefer an alternative view, which is that as one door closes another slams in your face.

Mark Field: Although we accept that some radical change is clearly overdue, which will, we hope, be put in place, and accept that the change will be fluid because of the fluid international world in which we live, will my right hon. Friend reiterate the importance of remembering that there will always be a need for certain information to remain secret? We do not want to throw everything out with the bathwater. There will always be a need for certain things to remain secret, even within this transparent 24/7 media world.

Malcolm Rifkind: Yes, there are crucial requirements and anyone will understand why that is the case. The identity of intelligence officers can never be revealed. If it were, not only would they not be able to carry out their proper responsibilities but their very physical safety would be in danger. Intelligence operations and the ways in which intelligence is obtained, processed and dealt with should not become public knowledge. If they were, they would be available to our enemies and would cease to be available in that way in future. There would be no benefit in having intelligence agencies unless that fundamental secrecy applied—that covers all the areas that are relevant to the operational work they do and the benefits they provide for our society.
	In the years since the end of the cold war, we have had the 7/7 bombings in London, which were very traumatic. Those terrible actions led to some deep soul-searching within the security and intelligence agencies. The perpetrators were British citizens who had been born in this country, but the agencies had not anticipated that event. In addition, there are problems with nuclear proliferation and cyber attacks, which might be aimed at Governments but cover a wide range of economic intelligence that is sought by foreign Governments and industrial interests. That is a matter of great significance.
	Those new demands led the intelligence agencies to operate rather differently, which is a welcome development. The most significant point is that the intelligence agencies now work together far more than ever before. If one went to GCHQ on any day of the week one would probably find officials from the Secret Intelligence Service who had been seconded there for a significant period. The same would apply to the SIS and to each of the agencies in reverse. That is happening not because of some doctrinal view but because of the practical requirements of getting the best use of intelligence in this modern world and ensuring maximum public benefit. It is not too dissimilar to the way in which the Navy, Army and Air Force have increasingly realised that operations will involve all those services, or two of the three services, with joint activity becoming the norm rather than the exception.
	The other big change, which I very much welcome, as does the Committee, has been the creation of the National Security Council. Not only does it provide an opportunity in general terms for strategic thinking, strategic planning and proper consideration under the Prime Minister, but for the first time the heads of the intelligence agencies attend meetings as of right and are able to ensure not only that they hear what is being said but that the intelligence they are providing is much more easily fitted into the requirements of Government so that the practical benefits of the intelligence is of much greater value.

Tobias Ellwood: My right hon. and learned Friend talks about the change in attitude and style in the work of our security services. Does he agree that after 9/11, in a bid to counter the asymmetric threats, the clandestine services lost their way for a period? I think of such things as Guantanamo Bay, water-boarding, rendition, dodgy dossiers and so forth. Does he agree that with the freedoms that were given to those services in a bid to try to find Osama bin Laden and hunt down the enemy we lost the moral high ground for some time and that it has taken a while for us to redeem ourselves?

Malcolm Rifkind: I certainly agree that serious issues came to prominence during those years, some of which were the responsibility of the agencies and some of which were more the responsibility of government. However, I think we should get this into perspective. So far as I am aware, not a single British intelligence officer has ever been accused of personally being involved in water-boarding, torture or maltreatment of an individual. The issue—and it is a very serious issue—is whether they were aware of those matters and whether they might indirectly have colluded in such activity. I do not wish to diminish the seriousness of these matters but it is very important to make that point and get things into perspective because the same is not true of many other countries around the world. That is an important point that has to be made.
	I want to speak briefly about four points in the report and then say something about the issues in the Green Paper, particularly about what is called the control principle, with regard to the handling of intelligence. Finally, I shall address the reform of the Intelligence and Security Committee. I shall try not to detain the House too long. The first of the four points in the report I want to address concerns the single intelligence account—the £2 billion that goes to the intelligence agencies. They have had a very large increase over the past few years but a cut is now being imposed—and understandably so—of 11% if one takes account of inflation over the next four years. The Committee has said:
	“It is essential—given the fundamental importance to our national security of the Agencies’ work—that the settlement is kept under review and that there is scope to adjust it if there is a significant change in the threat.”
	I know that every single recipient of Government funding would like to be able to say that, but I hope there is no dispute that when we are dealing with the fundamental issues of national security, if the threat were to change in a material way, it would not be acceptable to say that those resources could not be reviewed by a Government because that might in some way contradict public expenditure decisions. I have no reason to believe that the Government would take that view, but it is important to make that point, and that is what the Committee would like to stress.
	The second point is the security that will be needed for the Olympics. The director general of the Security Service—again, I quote from our report—
	“told us that he considers the Service to be well placed to manage the risks that the Olympics will bring.”
	However, he added that
	“the effort required to cover the Olympics will inevitably divert resources from the Service’s other work.”
	The Committee would like to emphasise that the National Security Council must take such steps as are necessary to minimise that risk. Although we understand that the Security Service is not at present making representations and feels that the task can be handled effectively, it is too early to be certain that that will remain the case and it must be kept under consideration.
	The third point relates to cyber security. In its reports of 2008 and 2009, the Committee drew attention to the increasing risks this country faces from cyber attacks. The Committee welcomes the fact that the Government have said that cyber is now a tier 1 interest in our national security strategy and have provided more than £600 million in new resources for that purpose.
	The Committee’s concern is not those sums but the potential over-interest within Government in cyber matters. We note in our report that there are 18 units with responsibilities in this field across the three agencies— two law enforcement bodies and five Government Departments—and express our concern, which the Government share, about the risk of duplication. It is extremely important that these matters are looked at to ensure that, with such large sums and so many elements of Government involved, we do not do mischief to our own objectives.

Mark Field: I entirely endorse what my right hon. and learned Friend says. We feel strongly that there is a risk of duplication, with 18 bodies having some say in cyber security. We are grateful for the Government’s commitment and provision of certainty of financing over a four-year period—the £600 million to which he referred. However, if in 2007 we had asked about the importance of cyber, it would have been largely off the radar. Does my right hon. and learned Friend agree that we must be aware that if this becomes a much bigger problem not just in governmental and military terms, but in commercial terms, by the end of that four-year period considerably larger sums might be required, along the lines of the provision for the Olympics?

Malcolm Rifkind: I thank my hon. Friend for his contribution to the work of the Committee. He and I visited GCHQ and saw at first hand the increasing threat from cyber that this country faces from a number of sources. I therefore very much endorse his comments.

Philip Hollobone: I am enjoying my right hon. and learned Friend’s speech immensely. In his Committee’s report, in recommendations K and E, the Committee identifies a wider technological problem facing our security services. In recommendation E the Committee says:
	“We are concerned about GCHQ’s inability to retain a suitable cadre of internet specialists to respond to the threat”,
	and in recommendation K it states:
	“The Committee recognises that the Security Service needs IT specialists in order to deliver its major technology projects. However, spending on consultants and contractors continues to increase at a significant rate.”
	Does my right hon. and learned Friend share my concern that although his Committee has identified this as a problem, the Government are not yet up to speed in providing the answer that his Committee seeks?

Malcolm Rifkind: I very much welcome what my hon. Friend says. It is timely, because the Intelligence and Security Committee some months ago commissioned its own investigator to carry out a study of the use of contractors and consultants in the intelligence agencies. We found that they were used to a very high order and we have a number of recommendations, which we are analysing and will subsequently put to Government. I hope that many of them will be made public. Contractors and consultants can be very expensive and are not always the best way of using the resources available, but sometimes they have skills that the agencies could provide only at disproportionate cost to their wider interests. I very much welcome my hon. Friend’s comments.

Geoffrey Clifton-Brown: Does my right hon. and learned Friend agree that the situation with cyber attacks is likely to get worse, rather than better? There are clear examples around the world of such attacks significantly disabling military installations and operations, so the Government must continue to regard that as a high-level threat. In contrast to what he has just said, it is the consultants working on this on the front line around the world who are likely to know the latest technologies, rather than those who have been employed by the intelligence agencies for some time.

Malcolm Rifkind: There may be some truth in what my hon. Friend says, and obviously these matters must be taken on board. Given his comments, I will make the general point that we should realise that cyber technology can be a threat and an opportunity for this country and others. One need only think of the use of what has become known as the Stuxnet malware, which temporarily prevented the Iranians continuing with uranium enrichment, which might lead to nuclear capability. If that happened—obviously, the information available is limited—it is a positive example of how such technology might prevent military conflict or a war ever taking place. Technology is not peculiar to one side of the debate or the other, but we must protect our secrets and our information. I strongly endorse my hon. Friend’s comments.

Richard Graham: Will my right hon. and learned Friend confirm that ministerial responsibility for cyber-security will be with the Cabinet Office and that that will in no way detract from the Foreign Secretary’s overall responsibility for GCHQ?

Malcolm Rifkind: That is one of the great dilemmas that Governments have faced and, I suspect, continue to face. It is not for me to comment on what the conclusion will be, but there has been some confusion on that. My hon. Friend will be aware that Baroness Neville-Jones at one stage had some responsibility for that within the Home Office, but she is no longer in government. It probably makes sense that the Cabinet Office has some sort of lead responsibility, but many loose ends still need to be addressed. If the Home Secretary or the Minister has any thoughts on those matters, I am sure that the whole House will be delighted to hear them when they reply to the debate, as it would deal with a problem that has been present for a considerable time and to which our report refers.

Julian Lewis: For the sake of clarity, before some reporter’s pen runs away with him, will my right hon. and learned Friend confirm that there was no suggestion in his remarks that UK intelligence services were responsible for the Stuxnet virus?

Malcolm Rifkind: Even our worst enemies have not suggested that, as far as I am aware. I of course entirely confirm that.
	My final detailed point on the report relates to a part of our intelligence community that is hardly even mentioned in this House or anywhere else: Defence Intelligence. It is part of the Ministry of Defence, but its contribution and role is greatly underestimated, if not entirely unknown, in the wider world, a point we draw attention to on page 51 of the report:
	“Defence Intelligence provides the largest single all-source assessment capability within the UK intelligence community.”
	As it is part of the MOD, it has perhaps been more subject to resource reductions than the other intelligence agencies. The report states:
	“The prospect of further cuts—combined with the impact of cuts to BBC Monitoring, on which DI relies heavily—therefore has potentially very serious long-term consequences for DI’s ability to support military operations”,
	which everyone tends to know about,
	“and for the UK intelligence community as a whole.”
	I hope that the Government can give some careful thought to how Defence Intelligence’s unique contribution to the UK’s overall assessment capability can be properly protected. I suggest that it perhaps needs a higher profile and status in the intelligence community than it has traditionally had so that there can be wider awareness of the benefits it brings to the national interest.
	I deal now with the intelligence aspects of the Government’s Green Paper, particularly the control principle and the ISC itself. As far as the control principle is concerned, many Members attending the debate will be aware that what I am referring to, and what the Green Paper refers to, is how we deal with intelligence received from other friendly intelligence services. Anyone who has any awareness of the intelligence situation will know that that is crucial to the UK, particularly our relationship with the United States. If the special relationship means anything, it means a dramatic amount of intelligence, which has continued for around 60 years and benefited the UK enormously. However, it concerns not only the United States; to a lesser degree, we share and receive intelligence from other friendly agencies as well. Fundamental to the system is the deep principle that intelligence shared with another intelligence agency will not be made available to any third party without the consent of the agency that gave it in the first place. That principle has overwhelmingly been respected, but there have been individual exceptions that caused great concern. Following the Binyam Mohamed case, the Court of Appeal decided that such information should be released in a limited set of circumstances, and that caused great concern in the United States and elsewhere. I and the Committee greatly welcome the Government’s determination to deal with the matter in a way that strikes a proper balance between the national security requirement and the interests of justice, because that is the crucial debate in these matters.
	Some might imagine that the Binyam Mohamed case was a one-off and that the Green Paper is an overreaction to the problem. With all respect, the Committee’s view is that it is not an overreaction. Although the Court of Appeal’s verdict might have been different in that case, we are today dealing with a situation that is very different from that which existed in the past. Information on this is given in the Green Paper, so I will share briefly with the House what the Government say. The Green Paper refers to judicial review, and not simply with regard to intelligence, but more broadly how it has increased over the years:
	“Recourse to judicial review has increased significantly in recent decades, from 160 applications in 1974 to 4,539 in 1998. By 2010 the number of applications had reached 10,548.”
	Judicial review and the overruling of the Government’s view—perhaps rightly in many cases—have become a major part of our judicial process, rather than an exception.
	The raising of intelligence matters in court has also been transformed dramatically in recent years. The same page of the Green Paper states that
	“in the first 90 years of the Security Service’s existence”—
	meaning MI5—
	“no case impacting directly on that Service’s work reached the House of Lords. In the last 10 years there have been 14 such case in the House of Lords or the Supreme Court.”
	That is no longer an exception, but increasingly something we must be aware of and decide whether the previous balance is the appropriate one in the wider national interest.
	Another point of interest, and one I was unaware of until recently, is that one of the circumstances in which these matters are being raised is not the release of sensitive documents to help in UK legal cases, as sometimes happens, but often the request for the release of this information to assist legal proceedings in other countries. The Green Paper states on page 7:
	“The Government has strained key international relationships and risked compromise of vital sources and techniques in no fewer than seven court cases in which the applicants sought sensitive UK Government-held but very often foreign government-originated information for disclosure into foreign legal proceedings.”
	Of course, Binyam Mohamed was such an example, because his appearance before a United States military commission led to the application in the first place.
	Against that background and as the report states, I and the Committee very much welcome the Government’s proposals to modernise the procedure and their recommendation that the United Kingdom use the closed material procedure and involve special advocates, as already occurs in several areas, to deal with such cases. The only alternative, traditionally, has been the public interest immunity approach, but that is a blockbuster approach, and if one secures such immunity one finds that none of the information can be seen by anyone.
	At least under the special advocate procedure, the special advocate—someone who has been vetted to be able to inspect such sensitive material—will have the opportunity to see it on behalf of his or her client, and, although they will not be able to reveal detailed information, they will be able at least to take it into account when advising their client on judicial proceedings.
	That is greatly welcome and a step forward, but the Committee wants to make this point. If these proposals are implemented, the situation will improve considerably,
	but they do not provide an absolute guarantee that no information can ever be released at the insistence of the court, a fact that the Government acknowledge. Page 21 of the Green Paper states that closed material proceedings, involving a special advocate,
	“reduce the risk of damaging disclosure of sensitive material.”
	Such proceedings do not remove the risk; they reduce it. Likewise, on the following page, the Green Paper states that a decision to allow a special advocate to be available can
	“be reviewable by the trial judge on judicial review principles if the other side decides to challenge the Secretary of State’s decision.”
	We are therefore dealing with a very curious situation. If the Government’s proposals are accepted, the balance will change, and that is good and healthy, but the significant possibility will remain that in very special circumstances a judge might take a different view on such matters and the information could be released, with all the consequences that might flow from that.
	Those who take the interests of national security very seriously indeed, as I certainly do and I am sure everyone here does, accept that, at the end of the day in a country that believes in the rule of law, the courts—in most circumstances, if not all—have to have the final word. I wonder, however, whether the Government ought to consider the argument that the provisions in the Green Paper need to be further strengthened: a belt and braces approach, which would not be inconsistent with the rule of law but would certainly provide added reassurance.
	The Government have been good enough to refer in their Green Paper to the way that approach might be taken, and paragraph 2.78 on page 33 states:
	“It would be possible for Parliament to provide the courts with clearer guidance in statute”.
	The proposal refers to public interest immunity cases, but it could apply to special advocate cases, and the Government go on to state in the next paragraph:
	“One such presumption”—
	written into statute as a “rebuttable presumption”—
	“would be against disclosure of sensitive”—
	national security—
	“material owned by foreign governments, obtained via intelligence relationships working on the basis of the Control Principle.”
	That is exactly what we need seriously to consider. It would not be inconsistent with the rule of law, because at the end of the day it would be a rebuttable presumption, and the court would determine whether the presumption were rebutted.
	As we have always known, the courts, when they interpret the legislation of this House, not only look at the words of an Act but try to identify, if they can, Parliament’s intention in passing it. If the statute stated that there were such a presumption against the disclosure of intelligence received from a foreign, friendly Government, the court would be able at least to take that into account before it reached a final decision, so I and the Committee hope that the Government give that proposal serious consideration.
	One of the main parts of not only our report but the Government’s Green Paper concerns the future of the Intelligence and Security Committee, and although I note that it is a major issue I will not detain the House
	for long, as I hope to conclude my remarks in at most another 10 or 15 minutes in order to allow everyone else who wishes to speak the chance to do so. It is, however, a crucial matter.
	Over a period of some 17 or 18 years, the Intelligence Services Act 1994 has become outdated: it no longer accurately describes how the Committee operates. That is part of the problem; another part of the problem is that the Committee, if it is to conduct its oversight effectively, needs additional responsibility and power.
	It is worth remembering that when the 1994 Act was passed, the intention was not only that oversight would be provided for the first time, but that the public would be reassured that it was independent oversight—and to some degree that reassurance has not yet been achieved. The public, when they look at the Act, see a Committee that is not a Committee of Parliament, although it is a Committee of parliamentarians, because we are all appointed by the Prime Minister, we report to the Prime Minister, and only through the Prime Minister do our reports eventually reach the House. That obviously calls our independence into question.

George Howarth: We are all nominated by the Prime Minister, but it is important to note that this House has to endorse the names of the Committee’s members before the Committee is formed.

Malcolm Rifkind: The House has to give its view, but I say to the right hon. Gentleman, who also serves on the Committee and has done so even longer than I have, that the Prime Minister has the last word. Although Prime Ministers have in practice never overruled the view of the House, they have the statutory power to do so. The House gives its advice, thus illustrating the difficulty in terms of the public’s view. That is the first problem.
	The Committee, in its report, recommends—we are delighted that the Government have accepted it in principle—that the Committee become a Committee of Parliament. It is a joint Committee of the House of Commons and House of Lords, with two distinguished Members of the House of Lords, Lord Butler and Lord Lothian, but we recommend that its appointment procedure be very similar to that used by the Standards and Privileges Committee or by all Joint Committees of Parliament. Names would be presented to Parliament, but Parliament would be able to veto them if it disapproved. If it disapproved, the names would have to disappear, and only when Parliament was satisfied with the recommendations would appointments be made. Parliament would have—in a way that it does not, and has never had—the last word on both the Chairman of the Committee and its members, and it would properly be a Committee of Parliament, albeit obviously required to operate under slightly different procedures because of the secret information that we deal with. That is the first reform of a fundamental kind.
	On the second reform, the 1994 Act states that the Committee has responsibility for policy, resources and administration, but it does not mention operations, a subject in which there is overwhelming public interest and in which, on a simple literal reading of the Act, we appear to have no involvement. People who ought to know better have recently asked, “How can the Committee operate effectively if it cannot even look at operations?”
	In reality, it has been looking at operations over the past few years, whether on the treatment of detainees, the Binyam Mohamed case or the use of intelligence during the Iraq war.
	The Committee has been able to look at the raw material and to question agencies about operations, but that role does not appear in the Act. That needs to be revised. We suggest that, instead of listing the issues that the Committee can look at, the Act should be reformed and simply state that “the Committee should have oversight responsibility for all the activities of the intelligence agencies”, thereby including operations.

Julian Lewis: On operations, does my right hon. and learned Friend agree that practice in the past has been—and is likely to be in the future—for the examination of particular operations to be retrospective and that there are very good reasons for that?

Malcolm Rifkind: My hon. Friend raises a very important point. In making our recommendations to the Government—the matter is important to them as well—we acknowledge that we do not seek the level of responsibility that exists in the United States, where certain senior members of Congress have to be consulted in advance of an operation regarding what the intelligence agencies will be doing. They do not have the power to stop an operation, but they are informed about it, as they were, for example—so we understand—of that involving Osama bin Laden.
	The ISC can see no public interest in such an approach. Having power without responsibility is bad enough, but to have responsibility without power is even worse. Our responsibility is to provide retrospective oversight, and the Government appear in principle to have accepted that, as long as we are dealing—as we agree we should be—with matters of significant national interest. That is right and proper. Many discussions will be needed about how that will be handled in practice, but the principle is of profound importance.

Geoffrey Clifton-Brown: I have been thinking carefully about what my right hon. and learned Friend said regarding a change in the procedure for electing his Committee. Would a constitutional issue arise if Parliament summoned either him, as Chairman of the Committee, or a member of his Committee to give information that they knew but felt they were not entitled to reveal? What would happen in such a case?

Malcolm Rifkind: I can give my hon. Friend a very straightforward answer: all members of the Committee are subject to the Official Secrets Act. We see the most secret information and we have therefore all been considered suitable for that purpose. Like any other United Kingdom citizen, we cannot reveal information that is in breach of the Official Secrets Act, which is an Act of this place and must be respected. In the unlikely event of the circumstances to which my hon. Friend refers, that would be the response.
	The third major reform relates to the fact that the 1994 Act states that the Committee may “request” information from the intelligence agencies. If the Committee has the power to request, the agencies have the power to decline. I have to be fair and say that the agencies have never used that power, but they are able to decline and
	that is no longer acceptable. Our view, which we have recommended to the Government, is that the Committee should have the power to require information to be shared by the intelligence agencies, and only the Government, not the agencies, should have the power to override that if, for example, a Secretary of State or Prime Minister believe there is some overwhelming national interest in doing so. That would have to be reported to Parliament.
	The power to require information is not just a change of words. At the moment, if the Committee wants information we request it and the agencies, which sometimes have massive files, produce a summary of the information. I am sure that they do it in good faith, but we are allowed to see only that summarised version. The power to require information will mean that we will have our own staff who can have informal discussions in a constructive and positive way with the agencies and see all the available information. Ultimately, they will decide what summary we might wish to see that and that would enable us to put questions to the agencies if we decided to take evidence from them. That is a much more sensible procedure, which I am sure will work. However, it is obviously a very important change compared with previous practice.

Hazel Blears: The right hon. and learned Gentleman has talked about balance in relation to the Green Paper. If there are to be more closed proceedings, is it not absolutely essential that there should be more rigorous parliamentary oversight? The Committee should therefore have more resources, not to aggrandise itself but to do the job properly that the Government are asking us to do

Malcolm Rifkind: Yes. The right hon. Lady is a very senior member of the Intelligence and Security Committee. In the Green Paper, the Government have combined enhanced oversight with proposals for reform of the control principle precisely for the reason she mentions. In addition, even if there had not been a Green Paper and there were no Government proposals, I am sure the Committee would have taken the view that the time had come for a fundamental root-and-branch reform of oversight, and would have been making the recommendations we are discussing today to the Government. I do not know—and we will never know—what the Government’s reaction might have been. That would have been a different situation.
	The final major change we are recommending relates, again, to the 1994 Act. The Act states that we have oversight of the Secret Intelligence Service, which is MI6; the Security Service, which is MI5; and GCHQ. That is all that is mentioned but, as the House will be well aware, the intelligence community is considerably wider than that. I mentioned defence intelligence a few minutes ago, and there is the Joint Intelligence Committee and the new National Security Council, which has a role partly concerned with intelligence. The reality is that, over the years, these additional agencies and parts of government have voluntarily subjected themselves to scrutiny by the ISC. That is right and proper, but it is time that the legislation caught up with the formal position. That has also been accepted by the Government.
	In conclusion, the House might think, “Well, that’s all very well. We know what the Government’s view is and we know what the Intelligence and Security
	Committee’s view is, but what about the agencies themselves? How comfortable are they with these proposals?” I cannot speak on their behalf, but I can say that our relationship with the agencies is very positive and that they have sometimes publicly said that it is time for reform.
	The agencies have taken an entirely constructive approach to the kind of issues we have been discussing today. Of course, there is a very good reason for that. Not only are the agencies great national servants operating in the national interest, but one of the big developments in intelligence oversight over the past 16 years has been that a Committee such as ours, whose primary role may seem to be to criticise agencies or the Government if something goes wrong, has also occasionally been the agencies’ champion if we conclude they are being unfairly attacked either in the media or elsewhere and are unable to defend themselves.
	The obvious example of that is the 7/7 bombings, when serious representations were made that because the names of the people responsible for the bombings were on the Security Service’s files, what happened could surely have been stopped and it was all a disastrous mistake. I was not involved in that investigation, but our predecessors looked into the matter in enormous detail. It is significant that the conclusion they came to was in all material respects the same as that the coroner came to a few months ago: although various criticisms could be made, the Security Service was being unfairly accused on the central question of failing to stop that terrible event in the circumstances. The agencies have trust in the Committee partly because it has operated in a mature and sensible way. Although on many occasions the Committee may have criticised things the agencies have done, we are also prepared to speak on their behalf in public and private if we think the facts justify it.
	Intelligence has been a hugely important issue for the United Kingdom for many years. The single most important intelligence achievement was Bletchley Park during the second world war, which had a material impact on our winning the war. More recently, how intelligence operates has changed fundamentally. However, the crucial aspects of intelligence remain the same: our national interest requires that intelligence agencies remain secret in their most crucial activities. That is how I started and that is how I conclude my comments. On behalf of the Committee as a whole, I commend our report to the House.

Theresa May: I am grateful to my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) for introducing his Committee’s report with his usual eloquence. I thank him and all the ISC’s members, a good number of whom are in the Chamber today, for the work they do throughout the year in overseeing our security and intelligence agencies. They play a very important role. Obviously, I will come on to the proposals to enhance the Committee’s role but, first, I would like to say that it plays an important and largely unseen role in overseeing the agencies. We are grateful to it for that. The quality of the Committee’s annual report underlines the unique and valuable role that it plays in the parliamentary oversight of the security and intelligence agencies.
	We continue to face a number of serious threats to our national security. As the Committee’s report rightly sets out, those threats come from a range of sources. Foremost among them are international terrorism, particularly from al-Qaeda and its affiliates. We also face an ongoing threat from residual terrorist groups linked to Northern Ireland, from serious organised crime, and from traditional espionage against British interests. Added to those long-standing threats, we must now address the growing threat to our cyber-security from cybercrime and cyber-espionage.
	On international terrorism, it is worth stressing that, despite the death of Osama bin Laden, al-Qaeda remains a threat. It is true that the organisation is now weaker than it has been at any point since 9/11. US military and intelligence operations, work by the Pakistani military and, of course, the enormous contribution that UK forces have made to the international effort in Afghanistan have all been key factors. I am sure that the whole House will want to join me in praising the contribution of our armed forces, who are fighting so bravely many thousands of miles away in order to secure our streets back home from terrorism. However, threats from al-Qaeda, and from other groups that subscribe to its global jihad ideology, remain. We continue to arrest very significant numbers of people for terrorist offences—over 650 in the past two years alone.

Hazel Blears: The right hon. Lady is detailing the nature of the threat that we still face in this country. On that basis, she will recognise that the Olympic games is an area where there is clearly a heightened threat. Will she, even at this late stage, consider delaying the implementation of terrorism prevention and investigation measures, so that people who have been relocated out of London, who are some of the most dangerous people in this country, do not have the possibility of returning to London before the Olympic games?

Theresa May: The right hon. Lady is right to say that the security of the Olympic games is obviously a key concern and a key issue that we will be addressing over the coming months; indeed, it has been addressed by significant work that has been taking place over the past few years, since the bid was won. We all want to ensure that we provide a safe and secure Olympic games where people are able to endure—I am sorry, I mean enjoy; “endure” is probably more like the athletes enduring some pain during the games—the sporting achievements. We have been clear about our reasons for introducing TPIMs. We have been clear, as well, that the introduction of TPIMs, as the right hon. Lady knows, is accompanied by increased funding for the Security Service, and for the police in their counter-terrorism capacity, in order to provide for extra surveillance alongside TPIMs, which ensures that we are able to be reassured about the level of security that we can provide in relation to individuals who will be under those measures.
	The leadership of al-Qaeda continues to plan operations in the UK. It attracts people for training, it has sections dedicated to overseas operations, and it radicalises and recruits. Even as its command and control infrastructure has weakened, al-Qaeda now seeks to inspire lone acts of terrorism organised and conducted without its guidance or instruction. We must now also pay more attention to the groups in Yemen and the horn of Africa, in particular,
	which are affiliated to al-Qaeda or support its ideology. These groups have independent capability. They can radicalise people in this country. Britons, Americans and Europeans are travelling to fight in Somalia with al-Shabaab and to train in Yemen with al-Qaeda.

Keith Vaz: Is that not why the National Security Council is so important? It brings together Cabinet Ministers and others—those who have domestic responsibility and Ministers such as the Foreign Secretary—in dealing with a country such as Yemen. What happens on the streets of Sana’a today may well affect what happens on the streets of London and other cities tomorrow.

Theresa May: I am grateful to the right hon. Gentleman for making that point. It is indeed the case that the National Security Council is able to bring together all the Government Ministers with an interest in matters relating to our national security—not only me and my right hon. Friend the Foreign Secretary but the Secretary of State for Defence and others. The right hon. Gentleman is absolutely right to point out that in looking at our national security we must also look at issues that arise abroad. As I have been saying, we must pay attention to the countries where people from the UK have the opportunity to travel to be trained and then to come back, perhaps to plot attacks here in the UK. What happens elsewhere matters for us on our streets, and he is absolutely right to say so. Indeed, when he intervened I was about to say that, of the people who are abroad in these areas, we know that some aspire to conduct terrorist attacks back at home.
	The emergence of such groups is a stark reminder that the threat picture can change rapidly and that the factors that drive the terrorist threat to this country have not gone away. Recent attacks in Nigeria demonstrate the range of places around the globe in which western interests, including British interests, are now under threat. We also face a significant and ongoing threat from terrorism in Northern Ireland. There were 40 such attacks last year. That threat has obviously required increased effort and resources from the security and intelligence agencies.
	The tragic events in Oslo this summer have also made us reconsider the threat from the extreme right. That is much less widespread and systematic than terrorism associated with al-Qaeda. However, contrary to some reports, our counter-terrorism strategy—CONTEST—already addresses that threat; that was a major change that we made to the strategy produced by the last Government. After Oslo, we will be allocating further resources to that work.
	Traditional espionage continues to pose a threat—to the commercial sector, as well as to our diplomatic and defence interests. The foreign intelligence services operating in this country seek to obtain a wide range of classified and privileged information in the fields of defence, politics, government, energy, and science and technology.
	The final threat that I want to mention is cyber-security. The national security strategy assessed cyber-security to be one of the highest-priority risks we now face. It is important to stress that this is not simply a risk for the future. Cybercrime is hitting British people, and cyber-espionage is hitting the British Government and British business, on a daily basis, right now.
	All these threats must now be faced at the same time as we prepare for the London 2012 Olympic and Paralympic games and the challenge of providing security for 10,500 Olympic athletes, 21,000 media and broadcasting personnel—double the number of athletes, I note—and the holders of some 10.8 million Olympic and Paralympic tickets. A question was asked earlier about the responsibility for cyber-security. That rests with the Cabinet Office, although that in no way detracts from the role of the Foreign Secretary in relation to GCHQ. The Cabinet Office is looking at a wide range of issues across Government in relation to cyber-security.

Tobias Ellwood: My right hon. Friend is right to say that the Cabinet Office leads on that, and that co-ordination is welcome news. However, do we not all have a responsibility to understand cyber-security? A generation is now growing up that is using Facebook, is yet to own a credit card, and has very different liberal values when it comes to using the internet. Some small and medium-sized businesses are perhaps reluctant to pay for the addition of cyber-security because it is a little costly and times are difficult. We all have a responsibility for this, not just the Cabinet Office and Government.

Theresa May: My hon. Friend makes an extremely important point. There is an onus on all of us who are using the internet to ensure that we are aware of the responsibility that we have for our own security. One problem is that many people are unaware of what is available to help them to increase their own personal security in relation to these matters. That is a challenge that we all need to face and to rise up to.
	All these threats require active and highly competent security and intelligence agencies to tackle them—and fortunately, in this country, that is exactly what we have. We should be proud of the agencies and of the work they do alongside their police colleagues. They work tirelessly, day in and day out, often at great personal risk to themselves, to keep the British public safe. They do this work without public thanks or public recognition, and we owe them an enormous debt of gratitude. As the Committee’s report notes, those working in this field continue to excel at a very challenging task. I am sure that the whole House will join me in sending them our thanks and our praise.
	As the Foreign Secretary set out last week, those agencies not only defend us from threats to our national security and to the lives of British citizens but provide vital support to British military operations and diplomatic intelligence, which gives us a key national advantage in foreign and security policy. But it is precisely because of the importance of the agencies’ role, and because much of it must be kept away from the public gaze, that their work should be properly scrutinised. It is also important that, where there are any allegations of misconduct by the agencies, public confidence can be assured and retained by rigorous independent parliamentary oversight. That is why the oversight provided by the ISC is so crucial.
	We sought in our Green Paper on justice and security to strengthen, clarify and modernise those oversight arrangements. For many years, successive Chairmen of the ISC have called for reform. We will answer that call. We therefore propose to formalise the role of the ISC, making it a statutory Committee of Parliament and allowing it to report to Parliament as well as to the
	Prime Minister. It will also be given a formal remit for oversight of the wider intelligence community. Crucially, our proposals will for the first time give the ISC the power to require information from the agencies.
	I want to stress that, although the Green Paper proposes that we should consider the extent to which the ISC should oversee the operational activity of the agencies, no decisions in that area have yet been made. We need to consider carefully the consequences of creating such a broad power, including the impact on the operational effectiveness of the agencies and the additional resource burden that would be placed on them.
	We are also looking at wider changes. We propose to consult on giving the intelligence services commissioner an expanded remit to monitor compliance with agency operational policies. We will also consult on more far-reaching proposals such as the introduction of an inspector- general to provide oversight of all agency business.
	Separately, we have strengthened decision making on national security issues by creating a proper National Security Council, as was referred to by the Chairman of the Home Affairs Committee, and appointing a National Security Adviser. Those are important and profound changes to the national security and intelligence machinery at the heart of Government and I am grateful that the Committee has welcomed them.
	Robust oversight and accountability are not the sole requirements of effective intelligence agencies. They also need to be able to keep the public safe, without the risk of vital intelligence or essential international intelligence-sharing relationships being compromised. For that, they need a proper legal framework that allows them to present their case in the courts and to defend themselves properly. It cannot be right that at the moment sensitive material is excluded altogether, meaning judgment is not reached on the basis of the full facts. That is why the Green Paper proposes reforms to allow the right balance to be struck between protecting sensitive material and giving the courts the access to the material that they need to allow justice to be done.
	The Green Paper makes proposals, to which my right hon. and learned Friend the Member for Kensington referred, to allow closed material procedures to be more widely available to the courts, to enhance the special advocate system, and to ensure that sensitive material, sources and techniques are protected. The overall aim is to allow cases involving national security to be heard fairly, fully and safely in our courts. I am pleased that the Committee welcomed those proposals and that there was cross-party support for them. I note that the right hon. Member for Blackburn (Mr Straw)—not always one to praise this Government’s decisions—called them “elegant solutions”.
	I stress that those are just proposals at this stage. I note the encouragement of my right hon. and learned Friend to strengthen that aspect of the Green Paper. We will consider other ideas if they come forward. However, our aim is and must be to strike the right balance between protecting sensitive material and protecting the fundamentals of British justice.
	As well as robust oversight and the right legal framework, the other thing that the security and intelligence agencies need to do their job is, of course, resources. I am pleased with the Committee’s conclusion that the agencies
	have been given a fair funding settlement in the spending review. Like the rest of the public sector, the agencies will seek to make savings in their support functions and corporate services. Collaborative working across the three agencies is the key to that. What is clear is that the agencies have the funding that they need to maintain their current range of operational capabilities and to invest for the future. For example, much of the £650 million of funding for our transformative national cyber-security programme will fund activity by the agencies. There is no question of allowing our national security to be diminished to make savings. Although the agencies face pressures, as they always do, like the ISC, the Government remain confident in their ability to meet those challenges.
	It is important to note, with the Olympics approaching, that the agencies’ plans for meeting the significant additional challenge of securing the games remain on track and that the Olympics security budget is protected.
	The first duty and the overriding priority of any Government is the protection of the British public. Although great progress has been made in counter-terrorism and other areas in recent years, serious threats to our national security remain. That is why it is so vital that we have security and intelligence agencies that can continue to reduce those threats and help keep us all safe. Their work is among the most important carried out by anyone. It is right that there should be robust oversight, which is why we are modernising and strengthening the oversight arrangements. I warmly welcome the Committee’s latest annual report. Its recommendations are informing change as we speak. I look forward to future annual reports being even more useful in helping our world-class intelligence and security agencies to get even better at the valuable work that they do to protect the public.

Yvette Cooper: I, too, welcome the Intelligence and Security Committee’s annual report and the work that the Committee has done this year, which was comprehensively set out by the right hon. and learned Member for Kensington (Sir Malcolm Rifkind).
	It is 13 years since I last spoke in a debate on a report by the Intelligence and Security Committee. That was before the attacks of 9/11, before the London bombings of 7/7 and the damage done by al-Qaeda, before the most recent military engagements in Afghanistan and Iraq and at a very different stage in the Northern Ireland peace process. There have been dramatic changes since then in the nature of the threats that Britain faces and in the nature of the work of the intelligence and security agencies to keep us safe. However, many of the principles that we debated then, such as the importance of accountability and managing the tensions between liberty and security and between democracy and secrecy, remain as valid and as pertinent now.
	I join the Committee and the Home Secretary in paying tribute to those who work in the intelligence and security agencies, and I place on the record the gratitude of the Opposition and those we represent. Our intelligence officers and agents are not known. By its very nature, their work must go unsung. Some have even died in the course of their work and have been laid to rest quietly with no public tribute. They work tirelessly, sometimes
	in dangerous conditions, to find a piece of a jigsaw that will never be fully complete, but which could yet save lives.
	In this debate, we must pay tribute from the Front Benches to the work of the ISC, as the Home Secretary has done. Its members take extremely seriously their responsibility to provide accountability, even though they cannot discuss or debate in public many of the issues that they pursue privately. There is a long tradition of cross-party working and consensus in the Committee, as indeed there should be, on many issues to do with intelligence and our national interest. I congratulate the Committee on its latest report. I also thank those who represent the Opposition on the Committee, my right hon. Friends the Members for Salford and Eccles (Hazel Blears), for Wythenshawe and Sale East (Paul Goggins) and for Knowsley (Mr Howarth), for their hard work on behalf of this side of the House and Parliament as a whole.
	As the Committee and Ministers have made clear, the security risks that we face have become more diverse and technologically advanced than at any time in our history. Hostile attacks in cyberspace by other states and terrorist groups have the potential to cause serious damage to the security and prosperity of the UK. The Home Secretary has set out the continued threat from al-Qaeda and rightly paid tribute to the work of our armed forces. The work on international terrorism and counter-proliferation are becoming more closely connected. We are also dealing with new challenges, such as helping new states to emerge from the Arab spring. The older and more established threat from groups in Northern Ireland is now a growing concern.
	Our security and intelligence agencies have expanded their work substantially over the past decade, supported by increased resources that were rightly provided over many years to keep Britain safe. The right hon. and learned Member for Kensington was right to point to the increasingly mature debate on security and accountability. As a result, there are large areas of agreement across the Committee and across the House on security and our national interest.
	The Committee has rightly welcomed the work done by the Government through the National Security Council and the growing focus on cyber-terrorism. It is right that the Government and the agencies are increasing investment and action in that area. I also welcome the ISC’s continued scrutiny of the Prevent and Contest strategies, which we have discussed on the Floor of the House.
	Like the Committee Chair, I welcome the Government’s attempts in the justice and security Green Paper to address the difficult issues of the control principle and the use of sensitive material in civil cases. Those are not easy problems to solve, but they are extremely important given the chilling effect on international intelligence arrangements if sensitive material is at risk of being disclosed. I noted the important points that the right hon. Gentleman made about the detail, practicality and workability of measures, and we stand ready to work with the Government to get that right, because it is hugely important.
	We welcome, too, the Gibson inquiry, which is important for maintaining confidence in the work of the intelligence agencies. The Committee may wish to look further at that matter in advance of the Gibson inquiry beginning its work, while there remain legal delays, to ensure that the inquiry can achieve its aims.
	A number of concerns are raised as a result of the Committee’s report. In particular, in the face of the ever-changing threats, the Committee’s scrutiny of resources is extremely important. The report rightly identifies areas in which the agencies could make greater savings by, for example, exploring a consolidated approach to vetting. The Home Secretary should also take seriously the Committee’s concerns about the scale of the real-terms cuts that the agencies are facing, particularly in Olympic year. The increases in inflation since the spending review have increased those real-terms cuts. Ministers will be aware that the chief of the Secret Intelligence Service told the Committee:
	“It’s quite hard to…maintain the capability of the Service when we face a 10% reduction in staff”.
	Clearly all Departments and agencies need to make their share of efficiencies, but in the current circumstances it is vital that the Government accept the Committee’s recommendation that
	“Given the importance of national security work, it is essential that the Spending Review settlement can be adjusted if there is a significant change in the threat.”
	We are also concerned about the particular pressures surrounding the Olympics. According to figures from the Library, the real reduction in the single intelligence account next year alone will be £60 million. Next year is the year in which the eyes of the world will be on us for the Olympics, and the Home Secretary rightly discussed the Olympics in her speech. The evidence quoted in the Committee’s report shows the pressure that the agencies will face. The Security Service chief has said that
	“there will be a large diversion of resource from other things into the Olympics. But I don’t think we’ve got any option about that.”
	The Secret Intelligence Service chief has said that the Olympics
	“will certainly have an impact on our intelligence operations and intelligence coverage of other targets during that period.”
	The Home Secretary and the Foreign Secretary must take seriously the Committee’s warning that it is
	“nevertheless concerned that this will inevitably divert resources from the Service’s other work during this period, and thus expose the UK to greater risk.”
	At a time when thousands of police officers are being lost, the Home Secretary and the Treasury should take the opportunity to review the level of resources available for security and policing next year to ensure that they are sufficient for the threats that we will face.
	As a result of the Olympics, there is also an additional reason for the Home Secretary to re-examine counter-terror powers, which my right hon. Friend the Member for Salford and Eccles has raised. The Home Secretary is aware of our deep concern that she is removing the ability to keep terror suspects out of London in Olympic year through control orders. The director-general of the Security Service told the Committee that under the Terrorism Prevention and Investigation Measures Bill and with additional resources,
	“there should be no substantial increase in overall risk.”
	Frankly, however, it is very hard for the House to understand why the Home Secretary should want any increase in overall risk, let alone one that is entirely a result of her own policies. The Committee is right to warn the Government about that and to raise the concern that the new regime does not offer the same level of assurance as control orders.
	We know that the Government have themselves admitted that there are issues to consider in that regard. Indeed, the Home Office has recently written to the House of Lords to say that the transitional period between control orders and TPIMs will be extended from 28 days to 42 days in an amendment to be tabled in the Lords in response, I understand, to resourcing concerns raised by the Metropolitan police. However, would it not be wise to delay the implementation of TPIMs altogether, at least until after the Olympics have taken place? Frankly, it is simply not responsible for the Government to reduce counter-terror powers, as well as resources, at a time when we know the pressures are growing. I urge the Home Secretary to examine the Committee’s report carefully and think again.
	Turning to the ISC’s proposals for its own reform, the current Chair called for those reforms even before he was appointed, and I welcome his continued commitment to them. The Committee has certainly evolved since the 1994 Act, as he rightly pointed out. It started with no investigatory resource, which changed after the debates in the late ’90s. Over the years, increasing levels of detail have been provided to the Committee, and also by the Committee to the public, including more information about overall budgets and information from other Departments and organisations. Although many people in the agencies viewed the Committee with a certain suspicion and anxiety in its early years, I believe most now agree about its importance and the benefits that the agencies are provided with by having accountability and independent scrutiny. The Committee can bust myths and counteract attacks on the agencies as well as challenge and explore problems without putting security at risk in any way.
	However, it is time to go further, and both the ISC and the Government are right to want reform now. The Government are right to consider strengthened executive accountability and greater scrutiny of the agencies through the executive and judicial routes, and they are right to consider options such as an inspector-general, although I understand that considerably more work will need to be done on that approach. For many years, the tradition of the agencies was one of very little executive oversight. Ministers would decide the overall framework, but they did not have clear accountability for how operations took place. That executive accountability has increased over the years, with the roles of the different commissioners being strengthened, but I do not believe it is yet on a sensible long-term footing, and the Government are right to explore that further.
	It is also right that we look further at parliamentary oversight. I believe that we should have gone further on that under the previous Government. It is right to consider creating a statutory Committee of Parliament with much stronger access to information. Of course, the Committee will always have to operate in a different way from other parliamentary Committees. The principle of its operating inside the so-called ring of secrecy is integral to much of its work, so it requires additional safeguards, including on how Committee members are selected. However, I believe that the Government could still go further.
	The Home Secretary said that the Government were still cautiously considering the proposal that the Committee’s work should cover operations. Of course,
	it is not for the Committee to second-guess operations in advance, which is not what the ISC is proposing, but there needs to be parliamentary scrutiny of not only the policies and good intentions of the agencies, but operations. Ministers and the agencies actively resisted that when the Committee was first established in 1994, but in fact the Committee has already gone further in practice than was originally intended in legislation. It is important to support it now and give it the proper underpinnings that it needs to be able to examine operations properly and thoroughly where it is appropriate to do so, and where the Committee believes that a significant issue needs to be investigated. I urge the Home Secretary to make progress in that area and accept the principle of the Committee’s recommendations.
	I also believe that there is a strong case for the Committee, or at least its Chair, to see more detail on individual cases. I have seen no convincing reason to deny the Committee, or its Chair, access to the full oversight reports on the agencies by the various commissioners, including the annexes, which are currently often withheld.
	It would help the House, too, for the ISC—or, again, at least for its Chair—to have access to the detailed papers on individual control order cases as, for example, the commissioner currently does. Again, that would not be to second-guess current cases, but so that the House could reflect on the implications of those cases for legislation. For example, we may be asked to introduce emergency legislation on TPIMs or on extending pre-charge detention, yet it is a genuine problem for Parliament that the only person who has seen all the cases that justify changing legislation is the Home Secretary who proposes the new legislation. There are too few checks and balances in that system, which is bad for democracy but ultimately also bad for the Home Secretary and for confidence in national security. It would be far better for Parliament and for the Home Secretary to have another independent voice that can come to judgment on the basis of the evidence and advise Parliament. Stronger counter-terror powers can be justified, but I would like stronger checks and balances alongside them. The Opposition would prefer to retain control orders, especially in Olympics year, but we would also prefer greater scrutiny of the control order regime by Parliament, including the ISC.
	Finally, I am astonished to find myself in agreement with the hon. Member for Stone (Mr Cash), who in last year’s debate argued that the ISC Chair should be an Opposition Member. There are significant advantages to the ISC following the example of the Public Accounts Committee, the Chair of which is a senior Member of the Opposition. That is not to cast aspersions on the current ISC Chair, who would make an admirable Chair any time in opposition, nor is it—perhaps more importantly —to cast aspersions on my right hon. Friends who did admirable jobs as ISC Chairs when Labour was in government. They would make excellent ISC Chairs now, but perceived independence and credibility is even more important for the ISC than for other Committees.

Malcolm Rifkind: I am extremely grateful to the right hon. Lady for the additional comments that she has volunteered. The House might like to be reminded that there is nothing to stop an Opposition Member from being ISC Chair. In fact, there is a precedent. Tom King, now Lord King of Bridgwater, was the first ISC
	Chair and remained for a period after the Labour Government came into power in 1997. It is entirely available to Opposition Members, depending on who they are.

Yvette Cooper: The right hon. and learned Gentleman is absolutely right that there are precedents. In fact, Lord King was Chair when I was a member of the ISC between 1997 and 1999, and he continued through to 2001. The principle of the Public Accounts Committee is that as a matter of course the Chair is a Member of the Opposition. The value of that is this: exactly because the ISC must operate behind closed doors, it needs to be seen to be independent and authoritative in its conclusions; and exactly because it cannot tell us the evidence on which its judgments are based, it needs to be perceived by the wider public to be independent of Ministers. That is important for the agencies as well as for the public.
	In the 1998 debate, the then ISC Chair, Tom King, spoke of the importance of the Committee having a unanimous all-party voice and authority:
	“When a situation arises that gives serious cause for public concern…We shall not be able to help matters unless we can say that we have investigated the allegations, with…access to all the relevant information”.—[Official Report, 2 November 1998; Vol. 318, c. 594.]
	Those words stand today. When I spoke in that debate, I said that accountability through the ISC lay at the heart of the tension not just between liberty and security, but between democracy and secrecy:
	“We have certainly come a long way since the mere existence of MI5 and MI6 was denied. I believe that, sooner or later, we will travel much further. We will have to improve our system of accountability, for the sake not only of democracy but of the very secret agencies that the United Kingdom needs to function and to protect our modern democracy. If we do not improve our system of accountability, those agencies’ capacity to operate in the national interest will be threatened.”—[Official Report, 2 November 1998; Vol. 318, c. 613.]
	Those words, too, still stand.
	The role of the ISC has become stronger since 1998 and it does vital work. Accountability has increased, but it has not yet gone far enough. The Government’s reforms are welcome, but they should be brave and go further, so that we continue to have effective agencies that have the confidence of the public in a modern democracy. Sooner or later, we will have that.

Julian Lewis: I begin by reassuring the shadow Home Secretary that, in my limited experience—I have been a member of the ISC for just over a year—such is the sense of cross-party common purpose on the Committee, I would have no difficulty in accepting as Chairman any of the Committee’s three excellent Labour members. However, such a thing is completely unnecessary given the outstanding chairmanship of my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind)—[Hon. Members: “Hear hear!”] I am glad to hear Opposition Members’ endorsements.
	In his opening remarks, my right hon. and learned Friend mentioned the totally discredited concept that history ended with the end of the cold war. Topics mentioned in the debate include the Olympics, cyber-security, general terrorism and the more traditional threat from more traditional enemies. In my somewhat disparate remarks, I shall try to touch on a few of them.
	When dealing with any form of enemy of the democratic system, it is helpful to think in the ways and along the lines that they think—if we have such twisted minds, to which some of us must own up. Our initial reaction in respect of the Olympic games is to think, “There must be a huge extra effort to protect the games,” but what would terrorists planning a series of deadly attacks in the UK think? Would they think, “I must go straight away to the heart of the games, where the maximum security effort is bound to be concentrated,” or would they think, “There will be a huge concentration of effort on the security of the Olympic games in that fortnight, so there will be great opportunities to create mayhem in all sorts of other, less protected parts of the UK”?
	Therefore, the problem facing the Security Service is that it cannot say, “With the extra effort we will put into protecting the Olympics, we will ease security measures elsewhere in the country.” The reality is that the holding of the Olympics in the UK is a considerable opportunity—I will not say that it is a heaven-sent opportunity, because it comes from a somewhat different direction—for terrorists to cause mayhem and to maximise the deadly effect of their perverted ideas carried into action. I often wonder whether it was sheer coincidence—it probably was—that the choice of London for the Olympics was announced just 24 hours before the 7/7 atrocities in 2005.
	We need extra concentration because of what could be visited upon us during the Olympics, but there are also new technological threats, to which hon. Members have referred. Everybody has welcomed the increase in resources—£600 million net—to ensure greater cyber-security in future. There was concern in the past about a lack of ministerial responsibility for cyber-protection, so it comes as a great relief to the ISC and its members to know that the role will now be undertaken by the Cabinet Office, whose Ministers have a legendary reputation for the protection of sensitive information. Think about it. However, when we are considering—[ Laughter. ] They got there in the end. As Frankie Howerd used to say, don’t take a vote on it.
	The Cabinet Office will be responsible for cyber-security, but that does not mean that it is the most suited Department to be responsible—nor has it been earmarked for the role—for the countering of the propaganda message that is used to generate recruits to the terrorist cause, which is closely related to cyber-warfare. We have heard a considerable amount about the attempts that have been made to decapitate al-Qaeda, which have enjoyed considerable success. However, we also know that attacks are increasingly lone-wolf attacks, when people self-start and trawl the internet, picking up messages and techniques that they turn into action, with deadly effect.
	It is of the utmost importance that the Government seek to counter the message put out to mobilise, radicalise and turn into terrorists impressionable and sometimes unbalanced minds already in our society. It is incredibly difficult for a security service to track such people: it is much harder to track a lone-wolf potential attacker than somebody who is engaged with people abroad and part of an al-Qaeda-like organisation planning a much more sophisticated attack. We need to hear more—the Committee will make an effort to ensure that we do—of the efforts that the Government are making to neutralise the radicalising messages on the internet and put forward a counter-narrative so that people can understand the values of the society in which they live.

Hazel Blears: The hon. Gentleman is extremely knowledgeable in this field because of his experience before entering Parliament, but does he share my concerns about the work of the Home Office’s research, information and communications unit, which the Committee has decided to consider much more closely? It is essential work but at the moment we have little information about what it is doing and its effectiveness.

Julian Lewis: I am delighted that the right hon. Lady makes that point. It is too early to have concerns about the work of the unit because we have not been able to examine yet. The work that such a unit is designed to do is, as she said, of the utmost importance, and if it carries it out successfully the public at large might not know how successful it has been in supporting themes and counter-narrative ideologies in the media and internet to the benefit of people in our society who might otherwise become disaffected. However, unless one can examine the organisation’s work—within what is commonly called the ring of secrecy—one cannot be sure whether sufficient work is being done or about its quality.
	On page 44, paragraph 156 of our report, the Committee stated:
	“The difficulty of measuring the success of PREVENT work is most notable in the work of the Research, Information and Communications Unit…which was established in 2007 with the primary aim of ensuring consistency, across government, on Counter-Terrorism and counter-extremism messages and developing a coherent narrative to challenge extremist ideology. RICU is jointly funded by the Home Office and the Foreign Office. It currently has 22 full-time staff and its budget in 2010/11 was £4.25m (of which £0.3m was spent on research and £2.7m was spent on communication campaigns).”
	That does not sound like an effort on the scale needed if we are seriously to counter the radicalising message of the enemies of our way of life.
	Democratic societies are inherently resistant to Governments propagandising against organisations involving their own citizens, in an attempt to get a message across to their own people; but sometimes we have to understand that there are forms of warfare besides open warfare—for example, the propaganda and counter-propaganda warfare that went on during the long confrontation with Soviet communism. During that period, in 1948, a Labour Government set up the Foreign Office’s information research department, which remained in existence until 1977 under Governments of both complexions, until unfortunately another Labour Government decided to do away with it. That organisation operated on a considerable scale, and its particular strength was that it made available to opinion-formers the detailed facts that enabled strong cases for what was good about British society to be made on a non-partisan, non-party political basis. I believe—I think that the right hon. Member for Salford and Eccles (Hazel Blears) shares my belief—that an effort on a similar scale might be necessary in the future.
	On the Committee’s operations, I can reassure the Home Secretary: she said that we need to consider the resource implications of the Committee expanding its work to consider operational matters; but I am not sure that there are many resource implications, because as my right hon. and learned Friend the Member for Kensington said, we are asking not to change what we do but simply to formalise what we already do. We are not asking to look over the shoulder of the intelligence
	and security services at what they are doing while they are doing it—in an operational sense—although they sometimes choose to give us glimpses of that, which obviously we treat with appropriate discretion. Instead, we wish to be assured that when something becomes contentious, the ISC can review the matter and decide whether proper procedures were followed, whether mistakes were made or whether we can help the security and intelligence services by giving them a clean bill of health.
	I shall take an example at random. It is known that over the years the approach of Governments towards Libya changed completely. Under the Labour Government, there was a policy—I am sure that its proponents would argue that it was a legitimate line to pursue—of trying to bring Libya back into the fold. For example, when Libya declared its intention to abandon its chemical weapons stocks—we now know that it still had some, although we do not know whether that was because it had not finished getting rid of them or because it was concealing them and cheating on its promises—it was regarded as quite a coup, quite a triumph for the security and intelligence services
	It now appears, however, that along the way the degree of co-operation between some of our agencies and some Libyan agencies might have crossed the line. If it did, for example in the rendition of two people, as has been reported, we will need a means of finding out why that line was crossed, which agencies crossed it, who, if anybody, was responsible—was it the Government, was it the agencies?—and whether there are lessons to be learned that we can help to articulate. If the Committee is not given the power to review such operations, many people will rightly ask, “What’s the use of having a Committee of parliamentarians, whose job is supposedly to supervise the security and intelligence services, if when something highly controversial appears to have happened, it cannot, does not or will not look into it?”
	I want to refer to one or two of the slightly more traditional threats. It was interesting to hear that the agencies still think that we should not, in our rightful concern about international terrorism, forget that the country remains an intelligence target for countries such as Russia and China. One of the things that worry me the more I focus on it is the possibility that some countries could steal our technology, use it to undercut our competitiveness and then buy their way into our infrastructure in this country. This would be of great strategic value to them in future. I will say no more about that for the moment, but I hope that others might feel it appropriate to do so later in the debate.
	Finally, I warmly welcome the proposal in the justice Green Paper to prevent the control order principle being breached. Irrespective of what piece of intelligence was disclosed in court, we must never forget that if we undermine the trust between ourselves and our principal intelligence allies on that issue, we undermine it on every issue. However, it also behoves us to remind our intelligence partners that when they engage in methods and techniques such as Guantanamo Bay and water-boarding, they open up not only themselves but their allies to challenges in court that make such problems much more salient, in respect of the evidence that a judge might feel had to be disclosed. It is a question of exercising two-way restraint: we do not wish to breach the confidence of our allies, but our allies must not breach the standards to which our intelligence services rightly apply themselves.

Paul Murphy: I am very grateful to be able to make a brief contribution to this important debate. Let me start by congratulating the Chairman, and the members, of the Intelligence and Security Committee. When I held that position some years ago, I was unable to open the debate, as the right hon. and learned Member for Kensington (Sir Malcolm Rifkind) has done so ably today. Indeed, I barely missed being constrained to 10 minutes because I was speaking from the Back Benches, so I am glad that addressing that issue was one of the first reforms to be implemented.
	The right hon. and learned Gentleman made an excellent speech outlining the work of the Committee, touching on the important point that, inevitably, people outside—or, for that matter, inside—do not know exactly what members of the Committee do. By its nature, the Committee deals with secret business and secret matters, so it is inevitable that people will be simply unaware of the huge amount of work that goes into what it does. During my time on the Committee, the amount of work that the Chair and the members put in meant that they were virtually doing a full-time job. My right hon. Friend the Member for Knowsley (Mr Howarth) and the Marquess of Lothian are the only two current Labour and Conservative members with whom I served on the Committee, but I know that the current members, from all parts of the House, do an excellent job. I pay tribute to them, as I do to the intelligence agencies and the great work that they do in keeping our country safe from terrorism and other important threats.
	However, there is one thing in the report that disturbs me. The report refers to the terrorist attacks of July 2005. The House will know that the Intelligence and Security Committee issued two reports on that terrible event—one when I chaired it and the other when it was chaired by Dr Kim Howells, my successor but one. It is important for the House to understand the point that the right hon. and learned Member for Kensington made about those reports, for which Dr Kim Howells and I were responsible, both of which came to the same conclusions about that event as the coroner: that the intelligence agencies could not have prevented what happened in 2005, because of resources and prioritisation. However, it disturbs me to read in the annual report—although I am pleased that the excellent director of the Security Service has indicated that he was sorry about this—that the information that the Committee received was not up to it, and that the work had not been done and the intelligence not looked at sufficiently well for the Committee to be properly informed about what had occurred.
	I want to confine my remarks, however, to the important business of the reform of the Intelligence and Security Committee, a matter that has been before the Committee for at least four years, and rightly so. The Government are to be congratulated on the Green Paper, which was referred to earlier. My right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) was right to emphasise that reform must come, as the Chair of the Committee said. However, we have to do that in such a way that we balance the significance of the Committee—by ensuring that secrecy is maintained—with the importance of ensuring that people in our country are aware that it is doing a proper job, and that is not easy. Every other Select Committee in this House can do all sorts of things—here in the Chamber, in the Committee Rooms and outside, even on visits—that the
	Intelligence and Security Committee cannot do. How do we square that circle? How do we ensure that people are sufficiently assured that the members of the Intelligence and Security Committee are, in fact, doing the job that the House of Commons and the House of Lords have asked them to do?
	There is a problem with trying to make the Committee exactly the same as any other Select Committee or Joint Committee of both Houses. We have gone down the right road by ensuring that this House and the House of Lords have the right to propose names. It is important that this should continue and that there should be a requirement that the Government respect the names put to them for membership. At the same time, however, the vital issue of trust—a word used throughout this debate —is critical, whether it be trust between our international allies or trust between the Committee and the intelligence agencies. If that trust breaks down, it will be a purposeless Committee that simply will not work.
	It has been said—the Chairman of the Committee himself said it—that when the Committee was set up back in the mid-1990s, it was an extremely different creature from what it is today. It did not deal with operational matters, but simply with finance, resources, structures and so on; but now, of course, operational matters have been dealt with. It is important that the Green Paper recognises that this should be put into statute, with a legal requirement for the Committee to deal with operational matters. I agree with the hon. Member for New Forest East (Dr Lewis) that the Committee is obviously not going to walk across to the MI5 or MI6 buildings every day, knock on the door and say, “Let’s have a look at what’s happening now,” as may happen in other countries. That is not going to happen, not should it. However, I am sure that it is the experience of the current members of the Committee, as it was when I was the Chairman, that when important issues arise, such as Libya or others that I can recall, the agencies will take it upon themselves to inform the Committee, and certainly the Chairman, of the significance of those issues. However, that has to be formalised, because at the moment we cannot insist that the Intelligence and Security Committee can deal with operational issues, which is a problem.
	Ultimately, it all comes back to trust. Whatever the legalities, if the agencies do not trust the Committee, for fear of leaks or whatever, they will simply—and quite rightly—not discuss sensitive intelligence matters with it that could present a danger to our country. Incidentally, I do not think for one second that any current or previous member of the ISC would do that, but that is obviously an issue that the intelligence agencies have to consider. I am therefore very much in favour of extending the Committee’s remit.
	As to whether the Chairman of the Committee should be an Opposition Member, it is quite interesting that the noble Lord King, who was referred to earlier, was a Government Member when he was appointed. It has rightly been said that when Labour won the election in 1997, he continued as the Chair of the Intelligence and Security Committee. It is quite interesting that when I was appointed in 2005, he rather grizzled and grumbled about it and said in the House of Lords that I should not have been appointed because I was not an Opposition Member, but still a Government Member. My view is that, ultimately, we need the right person for the job. Although there is an analogy between the ISC and the
	Public Accounts Committee—and my right hon. Friend the Member for Normanton, Pontefract and Castleford who served on that Committee has made it—I think we need to be careful how far we go down that line. It is important that the person chosen has the respect and confidence of both sides of the House of Commons and also, of course, of the agencies themselves.
	The other important issue that has been mentioned—I talk about it elliptically—is that of having consensus in the Committee. I cannot recall a single instance when a vote was taken in the ISC. It is not that there were no disagreements—there were many profound and deep disagreements about the members—but as a Committee we took the view that whatever our profound and difficult disagreements, we would have to find a way out of them. To my knowledge, only one single vote has ever been taken on the ISC—on whether a visit to particular place should be by plane or by train. That was the only real vote. Every other issue has been decided by consensus. It was obvious—no, perhaps it was not that obvious—that this place was in the United Kingdom. This shows that members of the Committee, usually senior Members who are there to serve their country in a special way, put aside party political allegiances and are on the Committee to do a particular job.
	I think that a difficulty might arise if the ISC were exactly the same as a Select Committee. That needs to be considered when we think about how the ISC should develop over the years. There is unquestionably a need for greater accountability, and the ISC, the House, the Government and my Front-Bench colleagues must work out how to achieve it.
	The other very important issue raised by my friend Dr Kim Howells when he chaired the ISC was the Committee’s independence from Government. I believe that this is critical. How do we achieve it? First, I do not think it was a good idea for the Committee to meet in the Cabinet Office. It should be removed from Government premises altogether and put somewhere on the parliamentary estate. The excellent people who work in the secretariat—they are indeed excellent—would work to Parliament rather than to the Government.
	I do not undervalue for a second the significance of the Prime Minister’s role in this because he has ultimate responsibility for the security of our nation and has to ensure that these hugely sensitive issues and materials are dealt with properly. However, I still think that there is a lot of work to be done to ensure the Committee’s independence—removing it physically from the Cabinet Office, and perhaps also taking the food and rations, so to speak, away from the Cabinet Office to ensure a genuine independence in the ISC.
	Work has been done and I am delighted to note the Government’s efforts in the Green Paper to ensure that we make progress. I was pleased with the remarks made by my right hon. Friend the shadow Home Secretary and, as I said earlier, pleased with the excellent remarks of the current Chairman of the ISC. We all owe the Committee a great debt, just as we do to the intelligence services. There is a balance to be struck between accountability on the one hand and the security of our nation on the other. It is one that we have struggled with for a long time, but I think that we are getting there at last.

Tom Brake: I echo the thanks of various Members to the members of the intelligence and security services for the work they do on our behalf to keep us safe. I also thank the right hon. and learned Member for Kensington (Sir Malcolm Rifkind) for setting out in a lucid and measured way what his Committee has found, which has led in turn to a measured and lucid debate so far, consistent with what the right hon. Member for Torfaen (Paul Murphy) said about members of the Intelligence and Security Committee putting aside party political allegiances. I welcome that, as we do not want party political differences to get in the way of the important security considerations that the ISC has highlighted.
	Both the ISC in its response and annual report and the Government in their detailed response have provided a useful framework for formulating a small number of questions for the Minister who will respond later. I hope he does not take offence at that. Let me deal with the recommendations in the report.
	Recommendation A deals with the savings to be derived from the single intelligence account. It talks about making the supporting functions more efficient and delivering new operational capability as a means of reducing the need for savings. I wonder whether a breakdown has been done to determine how the savings will be split between those two areas. The most certain way of achieving the savings safely is having a clear plan that identifies how those savings will be derived over future years.
	Recommendation B deals with the spending review settlements and poses the question whether they can be adjusted if there is a significant change in the threat. A number of Members have referred to this issue, including the hon. Member for Cities of London and Westminster (Mark Field). He is no longer in his place but spoke about the cyber-threat. The Government response states that
	“the SIA will first look to reprioritise from within its existing work.”
	The use of the word “first” suggests that the SIA might look to do something different secondly, but no second alternative is outlined, which makes me wonder what it is that the Government do not want to put on the record. What is clearly understood is that if a very large and significant new threat emerges, the Government would want to respond in a way that would involve resources. We would all expect that to be the case.
	Recommendation D deals with information assurance and making sure that it has the required backing. The Government’s response states that
	“the Deputy National Security Adviser will continue to work with the Communications-Electronics Security Group…to develop a suitable funding model that will ensure the long-term sustainability of their IA work.”
	Is it clear at what point that work is going to be completed?
	In a similar vein, in response to recommendation E the Government have rightly identified the need to take proactive steps to address the issue of retaining a suitable cadre of internet specialists. I hope the Minister will tell us what proactive steps have already been taken. I should state now—perhaps I should have done so at the outset—that the Minister, for clear operational reasons,
	might not be able to give answers to every question. Clearly, he will not respond if it is not appropriate for him to do so.
	Recommendation G identifies the need for GCHQ to be able to account for lost equipment. The ISC made it clear that GCHQ should ensure that the problem does not happen again and the response noted that good work had been undertaken with the National Audit Office since 2008-09. I wonder whether GCHQ has been able to provide the Minister with the assurance that those incidents of lost equipment, and the potential risks associated with them, will not happen again.
	Recommendation K deals with the Security Service’s need for IT specialists. A useful initiative has been set up with
	“the three Agencies…engaged in setting up a single unified mechanism for hiring interim specialists and contractors.”
	I suspect that this will make a substantial contribution to savings. I was hoping that a time frame might be identified for delivery.
	Recommendation P refers to the overlap between the Office for Security and Counter-Terrorism and the National Security Secretariat. Although that overlap is limited, I hope that the Minister will be able to explain how problems caused by the duplication of work are addressed.
	Recommendation V refers to BBC Monitoring. I know that work is proceeding on that front, but the Minister may be able to tell us something about the intended time scale for the review.
	Recommendation X refers to Shaker Aamer. Other Members may welcome an update from the Minister on any discussions that are taking place with the United States authorities.
	Recommendation Y refers to the Consolidated Guidance to Intelligence Officers. I thank the Minister for a recent briefing that clearly identified the difficulties and complexity that surround those issues, especially when Government agencies or the intelligence services are having to deal with a range of agencies abroad.
	Recommendation AA refers to the Government’s announcement of the publication of a Green Paper. That is very welcome, and I hope that the Green Paper will receive a wide response. Some parts of it may be deemed controversial, particularly those dealing with the use of special advocates and other aspects of the reform of the Intelligence and Security Committee. There is clearly a huge amount of expertise in the Chamber in that regard, and I am sure that Members who are present have already made an important contribution simply by giving their informed views, which can be read in Hansard tomorrow.
	Recommendation GG refers to the vulnerability of some of GCHQ’s sites. It is not clear to me whether the necessary resilience already exists, or whether it is being developed and is expected to be rolled out at some point in the future. Perhaps some clarification will be possible either now or at a later date.
	Recommendation HH proposes the establishment of a single SIA vetting service. That is, on the face of it, a sensible proposal. It has been under discussion since early 2010, and now, in late 2011, I should like to think that an end date is in sight.
	I hope that the Minister will consider the limited number of questions that I have asked to be pertinent. Let me restate my support for the work that is being
	done by the intelligence and security community and for the work that the ISC has done in ensuring not just that we are safe, but that due scrutiny is given to the services that are responsible for our safety.

Keith Vaz: It is always a pleasure to follow the right hon. Member for Carshalton and Wallington (Tom Brake), who, with his usual ingenuity, managed to give a number of written parliamentary questions an oral flavour. Some might well have served as essay titles. I noted that the Minister was writing furiously in preparation for his winding-up speech, and I hope that we shall all be able to obtain copies of his answers.
	I shall speak briefly. First, let me join Front Benchers and others in congratulating the right hon. and learned Member for Kensington (Sir Malcolm Rifkind) on the excellent work that he and his fellow Committee members have done in respect of the annual report. It was a change to be able to hear such a long and thoughtful speech from the Chairman of the ISC, rather than the limited contribution that my right hon. Friend the Member for Torfaen (Paul Murphy) used to have to make when he chaired the Committee. Things are certainly changing.
	I also welcome the commitment that the right hon. and learned Gentleman made in saying that the Committee intended to take oral evidence from the heads of the security services at some time in the future. I always think it odd that, although we hear about magnificent speeches made by the heads of MI5 and MI6 containing important statistics about the security threat, no one in Parliament is able to question them. We used to be told that their jobs were so secret that no one knew what they looked like, but nowadays it is quite easy to find out what Jonathan Evans and John Sawyers look like by means of the internet. There is no secrecy about their identities any more.
	In an intervention on the right hon. and learned Member for Kensington, I described the annual pilgrimage of the Home Affairs Committee, in a people-carrier with blacked-out windows, to a building somewhere on Millbank whose address we were not allowed to know. On arrival, we would be taken up through the back of the building into a room that was not the office of the head of the agency, but a meeting room where we were able to ask questions. We were not allowed to make notes or include what was said in our reports, although inevitably some of it had leaked out into a Sunday newspaper by the time the Committee was able to consider matters a week later. The fact is that it is much better for the heads of those agencies—both of whom I have met, and both of whom are highly intelligent individuals—to appear before the ISC, and for members of the ISC to put questions to them and receive answers. That is the basis of parliamentary scrutiny, and it is a very important step forward.
	I welcome the way in which the National Security Council has developed over the past 18 months. Its establishment was recommended by the Home Affairs Committee in the last Parliament. I tried hard to persuade the last Prime Minister to accept the recommendation. I told him that the NSC would be good for the country, because for the first time we should be able to co-ordinate all the various Government Departments. There would
	be a national security adviser who, hopefully, would give evidence to Parliament, and it would be a good way of dealing with issues relating to countries such as Yemen—foreign policy issues that also had a domestic resonance. I was pleased that, when the Prime Minister appeared before the Liaison Committee, he talked about the operation of the National Security Council. I welcome that co-ordination, and I think it important for us to hear more about what the council is doing.
	Obviously, in terms of its composition, the NSC differs from its counterpart in the United States, which is the model that we used when we considered the report two years ago. I do not think that Peter Ricketts or his successor, Kim Darroch, will ever quite become Condoleezza Rice—a great figure who can be brought before Parliament and make important statements about national security. That will never happen, because we will always have a career civil servant in the job. It is a pity, because I think that Prime Ministers ought to be able to choose more widely when selecting their national security advisers, but we never know: in the future, a Prime Minister may decide to do that.
	I want to refer to the excellent contribution of the hon. Member for New Forest East (Dr Lewis). He is entirely right to consider the threat that is facing our country. We must deal with those who are behind that threat, which is why I am so pleased that the Security Minister—the Under-Secretary of State for the Home Department, the hon. Member for Old Bexley and Sidcup (James Brokenshire)—has agreed to speak at the Select Committee’s conference in Leicester in December, when we will consider the roots of radicalism. As the hon. Member for New Forest East pointed out, unless we confront the threat with a budget larger than that which currently exists in the units in the Home Office, we will never deal with it. The only way in which to deal with home-grown terrorism is to engage the communities involved. The previous strategy was about preventing: “Let’s try to stop them doing what they’re doing.” That cannot be successful, however. Instead, we have to engage; we have to get right down into the communities and work with them—with different mosques and organisations. We heard from a fair few of them in the Home Affairs Committee evidence sessions, and I think that, by engaging, we can deal with this threat.
	This annual report is excellent, and we look forward to the next one, but we also look forward to its being even more transparent in respect of the issues it addresses, as the Committee and Parliament expect.

Richard Graham: It is with great pleasure that I rise to make my first contribution to this important annual debate as a Back Bencher representing constituents who work at GCHQ. May I add my congratulations to those already made to my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) on the crispness of the ISC annual report and the swiftness with which many of its recommendations have been incorporated into the Ministry of Justice Green Paper on justice and security?
	As a member of Her Majesty’s diplomatic service at the time, I well remember the concerns that were felt among the agencies in the run-up to the Intelligence
	Services Act 1994. They were very concerned about the impact of coming in from the cold and into the limelight of parliamentary oversight. Those concerns were, of course, largely overcome by keeping that exposure away from operations. I think it is true to say that the agencies’ worries in terms of parliamentary limelight have not been realised, but two issues have emerged: the handling of reputational issues, and the increased number of challenges of Government actions in our courts. I shall deal with each of them in turn.
	The Foreign Secretary rightly said only a few days ago, on 16 November:
	“Secret Intelligence saves both military and civilian lives, protects our economy, stops criminals and makes a critical contribution to our diplomatic and military success.”
	However, it is also true that the agencies depend hugely on their reputation—as, indeed, do all of us in this House. Reputation is everything, and I believe that, had the accusation of complicity in extraordinary rendition leading to torture been dealt with by an ISC with operational oversight, that reputational question mark would not still be hanging over the agencies. Nor would the ISC have faced the issues of poor record keeping that are identified in pages 70 to 73 of the annual report. That is a practical example of why the ISC remit should be “strengthened” to provide “more credible oversight” and
	“greater assurance to the public and to Parliament”
	by adding operations to its current remit of policy administration and finance. I therefore welcome that proposal and the Home Secretary’s positive response this evening, while also recognising that there will be much detail to resolve.
	On the increased number of challenges to Government actions in the courts, I absolutely agree with the Justice Secretary’s comments in the Green Paper that we need to use closed material procedures in mainstream civil courts, as that is the only way to reconcile the two difficult challenges of both providing fairness to all and ensuring our secrets are kept secret.
	I join the right hon. Member for Leicester East (Keith Vaz) in paying tribute to the Government for their innovative move of creating the National Security Council. I am sure that it contributed considerably to the successful pursuit of the United Nations Security Council resolutions on Libya, and I was delighted to see in the ISC annual report recommendation M on the NSC, which pays tribute to the successful establishment of the organisation.
	The right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) referred to there being too few checks and balances, but where was she and her concern for checks and balances when her country needed her in the run-up to the Iraq war of 2001, when it appeared to many of us outside this Chamber that decisions were being made and dossiers prepared exclusively in No. 10? I believe that, had the NSC existed at that time, with its checks and balances, it would have changed the course of our involvement in Iraq. No doubt historians will, in time, ruminate on that.
	Tonight, we have heard more detail on the ISC proposals, and we have heard the endorsement given to them by the Home Secretary. I have highlighted my strong support for two key measures: the more credible oversight provided by the ISC with a stronger mandate to include operational
	oversight, and the handling of secret intelligence in the courts so that the right balance between fairness and secrecy can be struck.
	The right hon. Member for Blackburn (Mr Straw) said not long ago that the Government have found “elegant solutions” to dilemmas that have faced successive Home and Foreign Secretaries in balancing the pursuit of openness with the requirements of secret intelligence. I agree, and I hope they prove to be practical solutions that will enhance the oversight of the work of our agencies, which are so important to all of us in this country.

Paul Goggins: It is a pleasure to follow the hon. Member for Gloucester (Richard Graham). He spoke about his pride in his constituents who do such tremendous work at GCHQ, and I join him in praising those dedicated and important staff.
	It is common ground among the main political parties that the Government’s top priority must be to protect the people of this country. Although we all want a law enforcement and criminal justice system that is as open as possible, in order to maintain public safety we must have some level of secrecy, and scrutinising the workings of that secret world is the core task of the ISC.
	As ever, my right hon. Friend the Member for Torfaen (Paul Murphy) put his finger on the key issue when he talked about the importance of trust. I am sure that I speak for all members of the Committee in saying that it is a privilege that trust has been placed in us in respect of the access that we have to the agencies and confidential information. It is also a privilege to visit the agencies and meet the staff who do such important work. Some of them are long-serving and very experienced, and I pay tribute to them of course, but I have noticed during my first year serving in Committee that there are also many energetic and ingenious young people in these agencies, and they do tremendous work. What they do is a very important form of public service, and I pay tribute to them.
	There is much to welcome in the ISC report on what has been done in the past year. Many Members have mentioned the NSC’s work and the coherence that it brings to national security. We all agree that that has been a very important step forward, not least because of the regular contact that that brings between senior Ministers and the heads of the agencies, as the ISC Chair, the right hon. and learned Member for Kensington (Sir Malcolm Rifkind), has pointed out. I am sure that that is helping to foster a greater degree of collaboration between the agencies, which is welcome.
	I want to say a couple of things about resources. First, I welcome the additional £600 million that is being made available to deal with cyber-security and the cyber-threat. That is an important investment and, as has been suggested, it will almost certainly not be a one-off sum and will need to be followed up in subsequent spending periods.
	On the funding of the agencies, the report says that the 11% real-terms cut is “a fair settlement”, which is a fair comment by the Committee. Given the rapid growth over the past decade in the funding available to the intelligence and security agencies and given the level of cuts right across government and the public services, it probably is a fair settlement. However, as page 15 of the report states, it is essential that the funding
	“can be adjusted if there is a significant change in the threat.”
	I have no reason to doubt the good intentions and good faith of the Government, but their response to the Committee’s report could be a bit more robust in the strength and clarity of the answer. We all accept that where things change we need to look first at reprioritising our resources. For example, the events in the middle east required a reprioritisation of the resources of the various agencies. Those agencies cannot expect simply to have new money made available if there is a new threat or a new need, but with the Olympics coming up, with the increasing threat from Northern Ireland-related terrorism and with the continuing threat from international terrorism, Parliament and the public need to know clearly from the Government that additional resources will be made available, if they are needed.
	On the Olympics, it is clearly recognised by government and by the Security Service that additional officers will be required by the Security Service. Some of those officers will be drawn from existing staff, but some will be new recruits. Last November, the Committee was told that the Security Service was
	“seeking to recruit 100 new intelligence officers by November 2011”.
	Subsequently, in May, the Committee was told that 90% of these officers are expected to take up their posts by November 2011. We are now in that month, and the House will be pleased to hear in the Minister’s winding-up speech that those staff have been recruited and trained and that they will be available well in advance of the Olympics.
	Finally, on resources, I want briefly to comment on the Communications-Electronics Security Group. That little-known group operates out of GCHQ and performs an important service in providing information assurance right across government and all its agencies. The problem is that the importance of that service is not reflected in the enthusiasm of Departments and agencies in taking it up, and as a result GCHQ is out of pocket to the tune of £7 million over the past two years. We have been given repeated reassurances that a grip will be got of that situation. It is very important that that happens and that in the next financial year we have a funding model for the service that actually means that it can be provided without having to be subsidised from the GCHQ budget.
	May I raise, as one or two of my right hon. Friends have done, the new counter-terrorism measures? The TPIMs are, as we know, intended to replace the control order system that went before. The Minister may or may not be pleased to learn that I do not seek to debate the principle of TPIMs as against control orders this evening, as we have done that often enough over the past few months. However, I remain of the view that the system that he is introducing is weaker, and I draw his attention to the remarks of the director general of the Security Service on page 46 of the report:
	“Covert investigation does not deliver disruption”.
	I do not wish to go over the principles again, but we are now six weeks away from the planned implementation of the new TPIMs system. As that system relies on additional resources being made available to the police and to the Security Service, we need to find out, in this timely debate, whether the additional officers that were to be recruited to provide the additional resource to the Security Service have been recruited and trained, and
	whether they will be available to work on the new system as soon as it is introduced, which will presumably be early in the new year.
	I also wish to draw attention, as my right hon. Friend the shadow Home Secretary did, to the director general’s comment in the report that
	“there should be no substantial increase in overall risk.”
	That of course implies that there may be some increase in the additional risk, and the Committee records that as being of concern to us. We will be taking an active interest in that in the weeks and months ahead. I am very grateful to the director general for his candid assessment of that situation, but Ministers will also need to pay close attention to whether or not the level of risk increases, and they must be prepared to act if there is any sign of an additional risk, be it substantial or otherwise.
	Such action must mean either additional resources or a willingness to return to this House to implement emergency legislation, which the Government have spoken about, which they intend to subject to pre-legislative scrutiny and which would impose greater restrictions on those suspected of deep involvement in terrorist activity. My view remains the same as that of my right hon. Friend the Member for Salford and Eccles (Hazel Blears), who intervened earlier in the debate. We feel that delay would be far better than uncertainty and risk. I say again to the Minister, as plainly as I can, that this matter has gone way beyond party political squabbling, although it never was about that as far as I was concerned. I put it to him that if there is any doubt whatsoever, delay should be the first thing that he considers and that he would have the full support of Members on both sides of this House if he did the sensible thing.
	Although I have been a member of the Committee for only the past year, it is fair to say that Northern Ireland has probably had a slightly higher profile in the Committee’s work this year than in the preceding two or three years. The Committee has been told that in 2008-09 the Security Service’s effort in countering Northern Ireland-related terrorism fell to some 13% of its overall effort total, which is not surprising given the progress in Northern Ireland. Not only was stage 1 of devolution delivered in 2007, but in July that year we saw the end of Operation Banner, which meant the end of Army involvement in Northern Ireland after 38 years. At that point, just a handful of dissidents remained. They were few in number, fragmented in their organisation, more interested in the proceeds of crime than in the politics of a united Ireland and technically inept in their capability. That has changed and their number has increased. Their expertise has clearly increased and now the threat level is “severe” in Northern Ireland and “substantial” in Great Britain. The director general reported to the Committee that although he has no reason to believe that an attack in Great Britain is imminent,
	“I certainly believe it’s in their minds”.
	We know that just in recent months the murder of police officer Ronan Kerr has occurred, a 500 lb bomb was placed near Newry and there have been other attacks, including on Derry’s UK city of culture office. These risks are real, and I again pay tribute to those who serve in the Security Service and to the Police Service of Northern Ireland in countering that threat.

Julian Lewis: Before the right hon. Gentleman moves on, he might wish to draw the House’s attention to paragraph 33 of the report, which states:
	“The Security Service has told the Committee that the numbers of individuals involved with the current republican terrorist groups is around half the number that were active in the Provisional IRA”.
	That is a very considerable number, is it not?

Paul Goggins: It is, although it is also fair to say that there are degrees of involvement. Although there may be some latent support at a fairly local level for certain individuals, the number of active people who are determined on violence in pursuit of their aims is probably still fairly limited. None the less, they are increasingly dangerous in what they do, and they need to be dealt with. That is why, as I am sure the hon. Gentleman will agree, the 34% increase in investment in the past couple of years in the Security Service’s work on Northern Ireland terrorism is welcome.
	There have been some positive developments, and it is important to record them in this debate. The devolution of policing and justice, of course, was a very important step in April last year. The PSNI and the Security Service have worked very well together in a new relationship over the past few years, which has borne great fruit. Only recently—this is outside the period covered by the report, but it is none the less important—Michael Campbell was convicted in Lithuania and sentenced to 12 years’ imprisonment there. That was the product of some very good work, and those were involved should be commended and congratulated.
	I warmly welcome the Green Paper, which others have already analysed. Frankly, it takes political courage to come forward with such a Green Paper. The territory is complex and the document is hardly a vote-winner, but it is essential that we grapple with such issues and seek to try to resolve them on a cross-party basis, because they are important. The Binyam Mohamed case was clearly a major breach of the control principle and, as we have reported in our report this year, when we went to the United States and met our colleagues and counterparts there it was clear that they were shaken by this development. Although they reiterated time and again the value that they attach to the relationship between the United States and the United Kingdom on intelligence and security, they made it absolutely clear that they must know that their intelligence is safe in our hands. If they cannot trust us, it would be a very negative development.
	We all agree that we want a system of open justice. Article 6, on the right to a fair trial, is a vital part of our system. As far as possible, of course, defendants and suspects should have the gist of the case against them outlined and given to them, but the problem is that the “gist” is starting to become virtually the whole case, which makes things very difficult. When evidence includes highly sensitive information, there must be a way of protecting it. Ministers have an obligation to ensure that they uphold article 6, but they also have article 2 obligations to the people who are the source of the intelligence that enables Ministers to act. Those people must be protected, too, because if Ministers were to reveal such information and thereby the identity of the sources, who might then be imperilled, it would be a terrible development. It is vital that both sources and the wider public are protected.
	I welcome the proposals in the Green Paper on the closed material procedures, but, as others have said, they must be made as tight as possible. In the end, the court will always have the last word and make the ultimate decision, but it is for Parliament now to make its views absolutely clear, through statutory guidance and through the consideration, as others have said, of the statutory presumption against disclosure of foreign intelligence material. All those safeguards should be considered, but, having had the courage to introduce this Green Paper and grapple with these issues, it is vital that we get it right. We will not get an early or easy second chance to do so, so it is essential that we make the best effort that we can now.
	Let me make a final point on closed material procedures. We are familiar with the arguments about the control principle and more familiar with its application to immigration cases in the Special Immigration Appeals Commission and to control orders—and TPIMs, when they are introduced. I caution the Minister, as we will increasingly need clarity on the recall of convicted terrorists who are out of prison on licence. I want to emphasise the importance of that. It is already an issue in Northern Ireland, and it will become increasingly important across the rest of the UK. When intelligence raises concerns about the continued involvement in terrorism of someone who has served their sentence and is now out in the community on licence, although that intelligence might not be able to be used further to convict that individual, it must be possible to use it to ensure that they go back into prison and continue their sentence so that the public are protected. That is another important test that the Minister will need to set himself when he comes up with the ultimate solution to the issues raised in the Green Paper.
	Finally, I warmly welcome what the Green Paper has to say about the future role and remit of the Committee. I am not personally persuaded by the argument put forward by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) that the Chair of the Committee should always be from the Opposition party, and there was a good exchange involving my right hon. Friend the Member for Torfaen in which the arguments were advanced. It is important that the individual who is in the Chair of the Committee should be respected by not only its members but more widely across Parliament and the agencies. The Chair should have the expertise and leadership to create consensus, which is at the core of all this work. We have that in our current Chair, and whether or not a future Chair is from the Opposition or Government party, those are the key credentials that that individual must have.
	I welcome the proposal that the Committee should be a Committee of Parliament, with all the safeguards that have been discussed. There should be a limited number of public sessions, which would help to explain more about the importance of the work of the intelligence and security agencies as well as that of the Committee. The remit of the Committee should run across not only policy, resources and administration, but all the work of the agencies. That already happens, and we need to ensure that it is formalised for the future.
	It is also important that the Committee can not only request information but require it. As we make that move, it will place greater obligations on the Committee to ensure that it gets the information and that it knows that it has it, as well as that there is nothing missing.
	That means that we will need a deeper investigative capacity in the Committee. The agencies should ensure in every case that we get all the information that has been requested the first time rather than the second or third time.
	Speaking personally, my first year as a member of the Committee has been fascinating and very enjoyable. I certainly look forward to the year ahead and the many challenges that lie in it. There will certainly be no let-up in those challenges, particularly with TPIMs coming into operation and the Olympic games coming to our capital city.

Richard Ottaway: I apologise to the House for my late arrival and for missing the opening speeches, but the Foreign Affairs Committee has been sitting tonight. The President of Turkey is in town on a state visit and the Turkish Foreign Minister and Baroness Cathy Ashton, the High Representative of the EU, have given evidence to us.
	It is a pleasure to follow the right hon. Member for Wythenshawe and Sale East (Paul Goggins), who is one of the new members of the Committee. I had the privilege of serving on the Committee from 2005 to 2010 and I found it to be one of the most rewarding experiences of my parliamentary life. He is quite right that Northern Ireland has moved up the agenda in recent years and I agree with virtually every point he made in his speech.
	As this is the first debate on such matters in this Parliament, may I take the opportunity to pay tribute to the staff of the ISC, who are of the highest possible calibre? There are not enough of them, but that is not their fault. I also pay tribute to the agencies for their hard work and the way in which they protect the freedoms that we all value. The Foreign Secretary rightly praised them in his speech last Wednesday and we can all join him in his praise.
	I also want to thank the three Chairmen I served under during those five years. Although it is regrettable that there were three, they all discharged their responsibilities with diligence and enthusiasm and were all of a very high calibre. I hope that my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) is the only Chairman we have in this Parliament, as a degree of continuity is essential.
	This is the first time we have looked at the report from the outside, so to speak, and one change I have noted—I do not know whether it is my imagination—is that there seem to be fewer redactions than in the past, which we recommended in the previous Parliament. We wanted reports to flow better, and I think that has been achieved.
	I share the concern about the drop in funding—a 10% cut would concern anybody. The agencies do not seem to be alarmed, but a 10% cut in staff at the Secret Intelligence Service would certainly alarm me.
	We host the Olympic games next year and I see that the agencies feel they are well placed to manage risks. However, that sits a bit awkwardly with the revelations in the past couple of weeks, after the report was published, that a review of security is under way.
	I agree with the Committee’s conclusions about cyber-security. The national security strategy puts cyber-security as a tier 1 risk, but under the present strategy an
	uprising in north Africa is a tier 3 risk, so I do not know how much weight one can put on these things. At the moment, we just take the world as we find it and try to address things.
	The Committee has noted that the Foreign Affairs Committee managed to get some of the World Service cuts reversed and would like to see the same happen with BBC Monitoring. I completely agree with that but I point out to members of the Intelligence and Security Committee who are present that the Foreign Affairs Committee’s recommendation was initially rejected and that it took a debate under the Backbench Business Committee procedure to raise it again before the Government took that on board. We have seen the growing influence of the Backbench Business Committee, and I do not know whether the ISC wants to get down to that level—get deep down and dirty, as it were—but it may be something it has to do.
	I also welcome the conclusions of the coroner who said, in relation to the report arising out of 7/7, that the ISC’s conclusions were “detailed and thorough”. The coroner also made some interesting recommendations about the use of photographs. I note that the Committee found that any discrepancies would not have changed its conclusions. That shows the calibre of the work being carried out by the ISC—if the coroner can describe the work as “detailed and thorough” and it can be said that conclusions would not have been affected. That is an important point to make in relation to those who were so critical of the reports when they came out.

Julian Lewis: I am listening to my hon. Friend’s speech with great attention and I think that another word of praise could be said for the services themselves in that context. In the past, when they have found that they have inadvertently overlooked some piece of information, in providing that information to the ISC, they have not hesitated to own up to that fact even if it opened them up to criticism. It is incumbent on us to encourage them to do that and not to be deterred from doing it because it is a slight blot on their record when they do not get things right first time.

Richard Ottaway: I completely agree, and I have always been hugely impressed by the vast quantity of information. When there was just one needle in the haystack, they might not have found it the first time around but they did find it the second time around and quite rightly, as my hon. Friend says, produced it for the Committee.
	On the Green Paper, may I support the point that was made about the handling of sensitive material, which I gather was mentioned by the Chairman of the ISC in his opening speech? The recommendations in the Green Paper are sensible and offer the best way of dealing with sensitive material, but I do not think it has to be instead of using a special advocate. It could well be in addition to using a special advocate and using the presumptions set out in the Green Paper.
	Let me address the role of the Committee and the way it operates. Parliamentary oversight of a secret service is always going to have limitations. I do not think there is a silver bullet, regardless of whether the Committee is a Committee of the House. Let me give
	an illustration. The major foreign policy objective of our engagement in Afghanistan is to deny al-Qaeda and international terrorists a base from which to carry out their operations. During the Foreign Affairs Committee’s report on Afghanistan, a number of witnesses told us that that is no longer a problem in Afghanistan, so at the Liaison Committee I asked the Prime Minister whether he was still receiving intelligence to that effect and he said he was. So, we are stuck with the same old problem that a major overseas deployment of the British Army and other armed services is based on intelligence that has not been subject to the scrutiny of the House. Those of us who were here at the time of the Iraq war know the problems that that can generate. This is an echo of the past. I have come up with a least-bad option and have written to the Chairman of the ISC to ask him to put it to the appropriate quarters when a suitable opportunity arrives and then to report to the House on the veracity of that information. I hope that, in the short term, that can be a way of dealing with the matter.

Malcolm Rifkind: May I say that we have been in touch with the SIS and have asked it to respond on exactly the points that my hon. Friend is concerned about?

Richard Ottaway: I am delighted to hear that because that presents a channel—certainly in the current circumstances, until there is a change in the law—through which the House can make inquiries. However, it irritates the hell out of a lot of Members that we have to do that. The fact that the ISC is not a Committee of the House has long been a bugbear. I remember debates in which Andrew MacKinlay used to go on and on about this and challenge the legitimacy of the ISC. We all love him deeply, but I think it is time to move on. It is wrong that the ISC has oversight of the Cabinet Office, which is the Department that administers the ISC. Those who are critical see the Committee as being somehow made up of Government lackeys, but that is an insult to the members of the Committee. Those who have served on the Committee know that we behave as though we were on a Select Committee; indeed, there is far less partisan behaviour on the ISC than on any other Committee I have served on. This issue can now be addressed.
	We have to accept that classified information can be handled only by those who are subject to the Official Secrets Act. If one accepts that principle, it does not make much difference whether the Committee is a Committee of the House or not, but there is a good case for it becoming a Committee of the House if only to remove the suspicion that has prevailed over the years. In making the move, the devil will be in the detail. There are a number of issues to address, although I will not go into the detail now, such as the question of appointments and the fact that the Official Secrets Act does not fit easily with freedom of speech.
	I think it would be sensible for the Committee to have powers to call for information that could be withheld only by the Secretary of State, rather than what happens currently. When I was on the Committee, the question “Have we seen everything?” was always at the back of my mind. It took two reports on the 7/7 bombings for us to satisfy ourselves that we had done everything. The fact that there was a second report illustrated that we had not seen everything the first time around. Another
	problem to address is how redactions will be dealt with by a Committee of the House, as the Government will not be able to threaten a veto on publication. Obviously, the report will be to the House, but what will it report? It is no secret that some evidence submissions to the Government never saw the light of day in the previous Parliament. How would that be treated if the Committee were to become a Committee of the House?
	This issue is a minefield, but the Government have found a way through it in their Green Paper and I support them. It is very hard to have democratic oversight of a secret service, but I think we are on the right track.

David Winnick: I shall follow previous speakers to some extent, particularly the latter remarks of the Chair of the Foreign Affairs Committee, the hon. Member for Croydon South (Richard Ottaway). I see this as a continuation of the debate about the parliamentary accountability of the security services. Over a number of years I argued, with other Members—Labour Members—for adequate parliamentary scrutiny of the services involved in security. When I was looking up previous debates on the subject, I noted that 23 years ago, almost to the day, I argued that such scrutiny was important, and that it was therefore necessary to provide the mechanism for Members of Parliament to look into what the security services were doing.
	Before the Intelligence Services Act 1994, which, as we know, established the Intelligence and Security Committee, a leading historian, Sir Michael Howard, observed in 1986:
	“So far as official government policy is concerned . . . enemy agents are found under gooseberry bushes and intelligence is brought by the storks.”
	In other words, children, Parliament and the public should not meddle in what were considered to be very adult matters.
	At least we have a consensus that we need to move on from the limited parliamentary machinery that was established at the time. I welcome the fact that the Committee is in favour, as the Chair said and as the report makes clear, of expanding the role of ISC. The Green Paper makes the same point.
	I note that in its recommendations the Committee does not suggest public evidence, but the Green Paper does. I see no reason why such evidence should not, in certain circumstances, be given in public. If some members of the Committee immediately say, “Much of what we do can’t be revealed in public; it is confidential—classified”, I agree. When I spoke in 2008 and tabled an amendment, which I later withdrew, about holding public sessions, the then Foreign Secretary accepted that there was scope for holding some sessions in public and wanted to make progress on that. It was not made then, but I hope it will now be.
	The then Foreign Secretary emphasised, as one would expect, the need to protect national security. Let me be clear: public sessions, yes, but most of the evidence and most of the Committee’s work would be in private. There would be limited scope, as I see it and as the Green Paper recognises, for public sessions.
	In the past the heads of the two main security services, MI5 and MI6, were not mentioned, as though they and the organisations did not exist. The difference is that
	now we have become used to the head of MI5—the current head and his predecessors—making public speeches. There is nothing novel about that. It does not necessarily get great news coverage because, as I said, it has become quite common. Last October for the first time the head of MI6 gave a public speech. Parliamentary democracy survived. The intelligence services survived. Presumably, as in the case of MI5, the head of MI6 and his successors will continue to make public speeches, where appropriate. It is true, of course, that in giving such a speech, the head of MI6 was not giving evidence and being asked questions by Members of Parliament. That, I hope, will be brought about.
	The Chair of the Home Affairs Committee made the point that when, from time to time, we have sessions with MI5—he mentioned MI5, so I will mention it as well—we are told that if we want to have such briefings, which obviously are private and remain so, we should go over to Millbank. I do not see any reason why we should do that any longer. If it continues, I for one, as a member of the Home Affairs Committee, would be most reluctant to do so. It seems to me that if MI5 is going to give briefings on a confidential basis, the director general should come to the House of Commons, not the other way round. It is not a major point, but it asserts the supremacy of Parliament.
	My right hon. Friend the Member for Torfaen (Paul Murphy), a former Chair of the ISC, and a very good Chair, as is the present one, spoke about Members. I hope all Members of the House are reliable and can be given information on a confidential basis. I am not putting myself forward as a candidate for membership as I do not particularly want to join the Committee. If it was said in the past—not, I hope, in the present Parliament—that there are some rogue elements among Members, the same applies to the Security Service. Peter Wright and other elements, a small minority of the Security Service, apparently believed that Harold Wilson was an agent of Moscow and acted on the instructions of the Kremlin. Let us be clear that in the past there have been rogue elements—a very small minority—among Members of Parliament, as in the security services.

George Howarth: Although what my hon. Friend says about some of the personalities involved is undoubtedly true, does he think it would give great cause for concern if there were rogue elements within the security services being overseen by rogue elements in the House of Commons?

David Winnick: Yes. I do not think it would help our national security. I hope that satisfies my right hon. Friend. I do not know what other answer I could give to that question.
	In previous debates I have criticised the ISC. I do not believe, and I am hardly alone in this, that it has been robust enough about the allegations of complicity in torture. The present Chair of the Committee said that there is no allegation whatsoever that British security officials have in any way taken part in torture. I accept that entirely. I said in the previous debate that there is not the slightest evidence that such torture has been used by British security services, but clearly the allegation, which is a very serious allegation, is complicity in torture. In respect of what has been happening abroad—the
	water-boarding, 160 times in one instance, carried out by the United States on an individual, Guantanamo remaining opening, the practices that went on there, the Pakistan security service and so on—the allegation is that British security officials knew what was happening and took no action. That is an extremely serious allegation. Peter Gibson’s inquiry is therefore to be welcomed. I am not sure whether the inquiry is already under way or when it is likely to conclude and publish its report, but perhaps the Minister will clarify that when responding to the debate.
	The question is whether the ISC was sufficiently robust when looking at the matter. In my view it was not. The Joint Committee on Human Rights, in a report produced last year, was critical of the ISC in such matters and expressed concern about the adequacy of the parliamentary mechanism for oversight of the intelligence and security services. I hope that there will be a different approach in future. It is very important that the ISC does not give the impression that it is simply the voice of the security services or that it is reluctant to criticise, because if that was its attitude it would not be doing its proper job. Unlike some Members, I have reservations about relevant sensitive material not being disclosed in court, and I will be very surprised if that is not the subject of further debate in the House.
	In conclusion, I in no way underestimate the acute and continuing terrorist danger to our country. Sometimes critics such as me are accused of underestimating, not recognising or playing down, the terrorist danger, but I certainly do not underestimate the danger, and I take the point as well about republican dissidents in Northern Ireland. Even if 7/7 and what was attempted a fortnight later had not happened, I would recognise first and foremost that this country faces an acute danger from Islamists who clearly believe that murdering as many people as possible is the way to paradise. Hon. Members have today put various views and arguments on how we should deal with the terrorist danger, and that debate will continue for some time. However, the greater the danger and the greater the role of the security services in trying to protect our country from further atrocities and mass murder, the greater the need for effective parliamentary scrutiny of those involved. It is absolutely essential that the changes proposed by the Committee and set out in the Green Paper are implemented in the near future.

Menzies Campbell: I should begin with an apology because it has been my misfortune to miss a large part of the debate owing to a prior commitment, which was on behalf of Parliament but outside the House. However, I have had the opportunity to listen to the debate and hear some very fine and perceptive speeches. I hope that I may be excused for singling out the right hon. Member for Torfaen (Paul Murphy), who made a very wise contribution. I was also pleased to hear the right hon. Member for Wythenshawe and Sale East (Paul Goggins), with whom I serve on the Committee, because his four years in the Northern Ireland Office undoubtedly qualify him to speak with common sense and great knowledge of the problems Northern Ireland presents, not least in recent times. The right hon. Gentleman referred to the Chair.
	I think that the Chair should be the best person for the job because any kind of preference, however well intentioned, could stand in the way of the Committee’s efficient working.
	As for what the hon. Member for Walsall North (Mr Winnick) said, or at least implied, anyone who doubts the independence of the Committee over the years should come to the office and look at the photographs on the wall of the people who have constituted the Committee over 20 odd years. He will not find one of them, man or woman, who could be described in any way as less than fully independent. My experience as a relatively new member led me to believe from the very beginning that the quality I had to demonstrate most of all was independence.
	Despite the independence of those who have served on the Committee, it is interesting to note the extent to which its role has been misunderstood, and often in circles where one would have hoped that its role would be much better appreciated. That is one of the most compelling arguments for the changes in the Committee that the Committee itself has recommended and that now form part of the Green Paper.

David Winnick: When I made my criticism of the Committee, I cited what the Joint Committee on Human Rights reported last year—that the Committee had not been sufficiently robust in dealing with the allegations of complicity in torture.

Menzies Campbell: That is a matter of judgment. Members of the Committee sign the Official Secrets Act and are subject to constraints when it comes to any criticism directed at them either collectively or individually. Based on my experience, however, I have never seen any action—or lack of action—on the part of the Committee which suggested a lack of independence of thought.

Paul Murphy: indicated  assent .

George Howarth: indicated  assent .

Menzies Campbell: I see members of the Committee, both past and present, nodding in agreement.
	I talked about independence a moment or two ago, but two other elements are important to the Committee’s membership: experience and judgment. The assessment of these is of enormous significance and importance, and, given that the ultimate responsibility for security in this country rests with the Prime Minister, the Prime Minister ought to play a significant part in the formation of the Committee. We can argue about whether he should play a part after or in advance of an election, but that is a detail for another day. I am in no doubt about the principle, however, that as the Prime Minister answers to the nation—to the country—for the security of the country, in this matter at least he ought to have a determining role.
	One other thing that has been brought rather remarkably to my attention is that the success of the three agencies depends on their co-operation. Those with longer—or perhaps not that much longer—memories than I will remember that there have been occasions in the not-so-distant past when the agencies have to some extent seemed at odds, when there has been a certain amount
	of competition and when they have found it difficult to share common objectives and, indeed, common information.
	The greater effectiveness of the services collectively has come about because of increasing co-operation. In the four years or so that I have been a member of the Committee, I have seen that co-operation grow and blossom. Co-operation is necessary because no one agency can hope to be the fount of all intelligence wisdom any more than one country can. That is why our relations with our allies are of very considerable significance, and why the debate and, indeed, controversy about the control principle have become so salient.
	I echo what others have said. When we last went to the United States, there was strong anecdotal evidence from people in positions of authority and responsibility that their anxiety about the control principle, or the lack of its application, might—if it had not already—inhibit the volume and quality of intelligence that they were willing to share.
	If someone has that anxiety and concern, they have a simple way of dealing with it: they just stop giving significant information. The problem is that if ours is the country expecting to receive information of that quality, we have no way of knowing that they have stopped. The supplier can simply turn off the tap, and we have no way of knowing whether what we still receive is of quality or, indeed, the sort of worth that the arrangements between our closest allies have often provided.
	It has been said—it is an entirely logical position to take—that if there is to be protection of information provided to us under the control principle, that enhances the argument for scrutiny at the instance of the Committee of the services. I certainly agree with that principle. That is why I hope that I am in the vanguard of those who support the proposal that the Committee become a Committee of Parliament, perhaps selected using the same method as that used by the Standards and Privileges Committee. However, as I have said, an important role and responsibility should rest with the Prime Minister.
	Like some more long-standing Members, I remember the debates that surrounded the creation of the Intelligence and Security Committee and the atmosphere in which it was launched, which was very different from that now surrounding the Committee’s activities. Although I was not a member of the Committee at the time of its inception, I imagine that the atmosphere was also very different then between the Committee and the services. I do not doubt for a moment that the services were perhaps suspicious but certainly apprehensive about the extent to which the Committee might inhibit or create some kind of obstacle to their activities.
	For that reason, we are entitled not only to change the form of the Committee but certainly to increase its powers. That is why the recommendation that we be able to “require” information rather than request it seems an essential part of the change that the Green Paper envisages. However, as others have said, the Committee staff is very modest in number. If the Committee is to fulfil this wider remit, it must have many more resources; otherwise it will have greater responsibility but less capability. That would be bound to reduce not only the quantity but the quality of scrutiny.
	I am amused by the suggestion that rogue elements of Parliament might be keeping tabs on rogue members of the security services. It occurred to me that perhaps the
	best way to keep tabs on rogue elements of Parliament would be to employ the services of rogue elements of the security services. The latter proposition may prove more powerful than the first.
	This is an annual debate of great importance. It is true that the quality of the Committee’s work depends to a large extent on the quality of the work done by its staff. That in turn depends on the quality of the activities carried out by those who work for the agencies. My experience of these people is that they are professional, unassuming and that they essentially live in the shade. There is no glory attached to what they do and there is hardly ever any public recognition. It is not the most generously remunerated occupation and it necessarily imposes considerable restrictions on personal life, on the ability to live in a normal way and even sometimes on someone being able to say what their occupation is. These are people of enormous quality. If one were looking for a fictional comparison, which is always dangerous, it is rather less like Ian Fleming and rather more like John le Carré.
	The right hon. Member for Wythenshawe and Sale East very properly paid tribute to the quality of the members of the agencies, and I would most certainly like to do so too. I also pay tribute to the leadership in the agencies, because that has not been expressly referred to. Daily challenges have to be faced. One substantial challenge coming down the track is the Olympic games. I am not an entirely impartial observer of that because I attend the Olympic Board under the chairmanship of the Secretary of State for Culture, Olympics, Media and Sport and, indeed, the Mayor. The Olympics will be a very formidable challenge.
	Let me say, in parenthesis, that everyone with any interest in sport remembers the horrific outrage of Munich. If anything of that kind were to happen in any other games, it would inevitably be definitive. Therefore, in the next 12 months or so these unassuming professional people will, perhaps from a domestic point of view, face a more severe challenge than they have ever faced before. I am confident that they will meet that challenge.

George Howarth: It is a great pleasure to follow the right hon. and learned Member for North East Fife (Sir Menzies Campbell), who has demonstrated the qualities that we have all come to respect in him: first, he has good judgment; and secondly, he is unerringly fair in the judgments that he exercises. It is a pleasure to serve with him. I think we are now the two old lags of the Committee.

Menzies Campbell: But look how young we look!

George Howarth: In my case, yes. [ Interruption. ] We are both certainly young in our outlook.
	I should like to echo the praise that the right hon. and learned Gentleman gave to the agencies and to the staff of the ISC, who are very open with us, very helpful, and enable us to do the job that we have been appointed to do. When we go to visit the agencies—sometimes we do have to make visits, like other Committees—or when they come to give evidence, those events are invariably well organised and well informed. Our most recent visit, which was to GCHQ, was no exception, and I learned a lot from it. It was well structured and well organised, and it is important to acknowledge that.
	Before I move on to the three key issues that I want to cover, it is important to recognise that the impartiality, or independence, of the Committee is paramount and, in my experience, can be relied on. Michael Mates, a former member of the Committee who, until he retired at the last election, served on it from the outset, used to say that when the Committee meets, our political affiliations are left at the door. In my experience, that is the exactly the case. We are seeking not to score party political points, but to get at the truth and carry out the job of scrutinising the work of the agencies concerned.
	That leads me on to my first point, which is about the reform of the Committee. A great deal has been said about that already, and I will not repeat it all, but I want to make two observations. First, I agree with the right hon. and learned Member for North East Fife and my right hon. Friend the Member for Torfaen (Paul Murphy) in that I am unconcerned about whether the Chairman of the Committee is a member of the governing party or of the Opposition party. I have served under four Chairmen—their downfall, in three cases, had nothing whatsoever to do with me—and I have found them all to be extremely capable and experienced. Whatever their political affiliation was, it never influenced how the Committee was conducted. The most important thing is that we get the right man or woman in the job. I hope, like the hon. Member for Croydon South (Richard Ottaway), that we might have some continuity with the current Chairman during the course of this Parliament, because that is helpful.
	Secondly, I support the reforms of the Committee set out in the Green Paper and covered in our report. Let us be brutally frank: there are now two Prime Ministers who have wanted reforms in this direction, and it would be a very foolish Committee that did not notice that they were both from different parties and that perhaps the time for change had arrived. I therefore have no problem with the reforms.
	However, we need to be careful about one thing. We should not set up the expectation that these reforms will make the whole operation of the services and everything that they do a matter of public knowledge. As the Chairman of the Committee said at the outset, there is information that we are party to that we can never make public because we sign the Official Secrets Act and, by and large, retain the trust of the agencies. That is why we sometimes, reluctantly, have to put redactions in our annual reports. Principled critics of the Committee criticise it because we have access to privileged and secret information. States will always have secrets, and necessarily so. We should not lead anybody to believe that everything that we know will be made public as a result of the reforms of the Committee. I know that nobody is claiming that and I do not mean this as a criticism of the Government or other Committee members. However, it is important, as the right hon. and learned Member for Kensington (Sir Malcolm Rifkind) made clear at the outset, that there will not be a free-for-all in relation to the information that the state has and what can be made public. The brutal truth is that a state secret that becomes public is no longer a state secret and is therefore useless.
	The second point that I want to make is about cyber-security. That issue has been covered extensively, but I want to cover it in a slightly different way. It is not
	a new issue. In June 2009, the Cabinet Office produced the “Cyber Security Strategy of the United Kingdom”, which rightly stated that it was an urgent, high-level issue that could not be ignored. More recently, in October 2010, the national security strategy cited
	“Hostile attacks upon UK cyber space by other states and large scale cyber crime”
	as a tier-one risk, as the right hon. and learned Member for Kensington has said. For several years, the importance of this issue has been acknowledged. However, for national security and diplomatic reasons, the UK has been coy about naming those responsible, at least until recently. I will say a little more about the recent developments where those responsible have been named in a moment.
	First, I want to use this opportunity to emphasise how important this issue is for our country. Our annual report makes it clear that we generally approve of the cross-cutting approach that the Government are taking on cyber-security. It states rightly that the Government’s decision to move ministerial responsibility for the issue to the Cabinet Office, which is better placed to deal with such issues across Departments, is appropriate. That was a good move on the part of the Government.
	It is also important that we seek better international cyber-security controls against cyber-attacks. I do not underestimate the difficulties that that presents. I am well aware that the Foreign Secretary is on the case and is raising this issue in international forums, no doubt discretely. I believe that we need to develop international protocols and controls over the coming years to make it easier to get control over what is going on across the world. I do not make that point in a spirit of criticism, I merely say that the matter has to be given some prominence. I hope that the Under-Secretary of State for the Home Department, the hon. Member for Old Bexley and Sidcup (James Brokenshire), might be able to support that point of view when he winds up the debate. It is in the interests of our national security, and of businesses in the UK, that we take such an approach.
	I wish to make one further point on cyber-security that is perhaps less driven by consensus than those that I have already made. It concerns the role and status of the Prime Minister’s official representative to business on cyber-security, Baroness Neville-Jones, who was of course Security Minister until May. Over recent years, our Committee has struggled with both the current and previous Government on whether those primarily responsible for attacks could be named in our reports. I am sure the right hon. and learned Member for North East Fife would bear me out on that. Up until this year, we were losing that struggle. However, there has been movement. In his recent signed article in The Times, the head of GCHQ, Mr Iain Lobban, flagged up the importance of the issue, but sensibly declined to say which countries were responsible.
	In our report, published in July, we went further, stating:
	“The greatest threat of electronic attack continues to be posed by State actors and, of those, Russia and China are”
	suspected of carrying out “the majority of attacks.” That form of words, carefully nuanced and the product of thorough negotiations between the services, the Government and our Committee, was the best way of putting it. Certainly the Government and the agencies concerned seemed to believe that that was the right way
	to describe the situation. However, when Baroness Neville-Jones was pressed in an interview on Radio 4’s “The World at One” about whether China and Russia were involved in such attacks, she responded, “They certainly are”. That is rather further than anybody else has gone.
	The reason for highlighting that is straightforward. Either it is right to be circumspect about naming the states concerned, or it is not. It is not clear to me whether Baroness Neville-Jones speaks for the Government or whether she is, as it were, a free spirit in these matters. We need to know with what authority she speaks, and to what extent anything she says can be attributed to the Government or to the agencies concerned. Perhaps the Minister might be able to say a little about the noble Lady’s position, and what her status and authority is.
	I turn to the use of intelligence material as evidence. The issue has arisen principally from the Binyam Mohamed case, and the Government have brought forward a way of dealing with it that may or may not work. I agree with the points made in our annual report about the matter, but what concerns me is that, no matter how Parliament may express itself on the issue, what guidance is given to the judiciary or what clauses are put in Bills, at the end of the day judges who will handle such cases will have to make a choice between, on the one hand, what is in the national interest and important for national security, and on the other hand the conduct of the court and the particular trial that is taking place. My fear is that the conduct of the trial and the proceedings of the court will, in some cases, as in the Binyam Mohamed case, take precedence over what Parliament intended, anything in any particular Act of Parliament, and the national interest. This is not an attack on judges. I have tried to think of this by asking myself, “What if I were sitting in that chair and had to make that choice,” but they might ask, “What am I responsible for?” The answer is that they are responsible for the good conduct of that trial.
	Why is that important? Several hon. Members, including the right hon. and learned Member for Kensington, who chairs the Committee, have made the point that it is hugely important that the co-operation we have with foreign Governments on intelligence remains something on which we can rely. In turn, it is vital that those Governments feel that intelligence that is passed to the UK will not be made public in court proceedings. I would go slightly further than the right hon. and learned Member for North East Fife. I believe that the amount and quality of intelligence that we have received from the US since the Binyam Mohamed case has declined. As the right hon. and learned Gentleman said, that is a difficult case to prove, and I cannot within the confines of this debate give chapter and verse on it—certain issues of which I am aware cannot be discussed in public—but most well informed people who have made a judgment on the matter believe that co-operation between the US and the UK has declined.
	That is important not from the point of view of the volume of information that we receive, but because incidents have been prevented on the basis of intelligence co-operation not only with the US, but with other close allies. The reputation of the UK could become such that foreign agencies and Governments feel they cannot share information with us because it will end up being broadcast all over the place in a court case. As has already been said, there is evidence that fishing trips are being made in the British courts to support cases elsewhere.
	I am not necessarily saying that the Government have got it wrong. My point is that we need to think long and hard about how we will handle this, not because of any political matter that might attach itself to the problem, and not even because of day-to-day political relationships with other Governments, but because getting as much information as we can is in our national interest and the interests of the security of our people. I hope that will be addressed fully and sustainably as things develop and in legislation. It should be addressed in a way that does not leave the courts feeling that they can do what they like regardless.
	As other hon. Members have said, it is an enormous privilege to be a member of the Intelligence and Security Committee—it is now six years since I was fortunate to be appointed to it. The Committee is sometimes criticised not for what we do, but for what we cannot say. We should be careful in how we deal with that. Hopefully, we are all big enough and experienced enough to know that we sometimes have to take a hit as a Committee and as individuals because some sections of the press and the media want to know what we know and we cannot tell them, but at the end of the day, being able properly to oversee the activities of the agencies and knowing why the public need to be protected overrides our concerns about any criticism we might get in the media.

Hazel Blears: It is a great pleasure to follow my right hon. Friend the Member for Knowsley (Mr Howarth), who has immense experience in intelligence and security matters.
	I have only been a Committee member since the beginning of this Parliament, and this is the first annual report with which I have been involved. I want to put on the record my thanks to former members, including the right hon. Member for Torfaen (Paul Murphy), who have pursued challenging issues with great diligence, tenacity and, as my right hon. Friend the Member for Knowsley has said, often while subject to criticism simply because the Committee was unable to share with the world at large the information on which it had based its judgments. In some ways, being on the Committee is a great honour, but in others it is a thankless task. Nevertheless, every member, irrespective of their political party, has done their job with tremendous pride and great results.
	I also praise the leadership of our Chair, the right hon. and learned Member for Kensington (Sir Malcolm Rifkind). Since becoming a Committee member, I have noticed not only his ability to get the best out of everybody, which is the most important characteristic of any Committee Chair, but his personal focus, energy and determination to make progress. We would not have the proposals in the Green Paper on strengthening parliamentary oversight, or at least they would not be so good, had it not been for his personal commitment, so he can rest assured and sleep easy in his bed tonight—I am not after his job and I am more than content for him to carry on.
	The Committee operates in a spirit of constructive consensus. There is a general sense of personal commitment from all its members—for example, we meet every week, which many members of the public do not realise. I have benefited from the experience of members who have served previously. We have members with extremely
	diverse experience—I have thoroughly enjoyed the contribution by the hon. Member for New Forest East (Dr Lewis), who, as I said in an intervention, had tremendous experience in these matters even before he came to the House. Such experience informs the Committee’s work. Furthermore, we have the undoubted wisdom of our two distinguished Members of the House of Lords, who, in their own ways, make a fantastic contribution.
	I want to place on the record—this sounds a bit like an obituary—the work of our fantastic secretariat, which no one has mentioned yet. Its staff are few in number, which is a point I shall come to later, but their breadth of knowledge, their institutional memory and their tenacity in following the threads of an inquiry are extremely impressive and have proved invaluable to the Committee in pursuing our inquiries this year.
	We are charged by statute with looking at the administration, expenditure and policy of the services, and much of our work is devoted to that, because we have to ensure that the services are operating properly, acting within the legal framework and seeking value for money. Several hon. Members tonight have talked about the tight budget settlement. It is a fair settlement, given the general economic situation, but nevertheless we must keep an eye on such pressures on the services.
	I have been very impressed by the agencies’ openness and frankness with the Committee—as my right hon. Friend the Member for Torfaen has said, that is about trust. While we have that trust relationship, they are amazingly open with the Committee, not only on policy and administration matters, but, as has been mentioned, on operational matters. That is an important part of what the Committee does, because we cannot properly consider policy in isolation from the operations governed by that policy. If, therefore, the Committee is to do the job that it is charged with doing, it needs to look at those operations, albeit retrospectively, as hon. Members have said.
	Recently, the agencies have given access to our investigator in a way that has been really positive. Owing to time restraints, the Committee inevitably cannot delve into certain issues in order to get to the detail, and our investigator has done some excellent reports on vetting and on the use of consultants and contractors. That is one reason why the proposal to give the Committee more investigative resources is so important. If we are to pursue a wider range of inquiries, we need the ability to do that to a high level of competence.
	We have also visited the agencies, using the opportunity to talk not only with the heads of the services and senior officials, but with those operating at the front line on some of the most challenging issues, be they counter-terrorism here in Britain, support for military operations overseas or the development of technology to combat the cyber-threat. Like other members of the Committee, I have been hugely encouraged by the professionalism and commitment of those people in working to keep our country safe, often at great personal risk. Many are young people, and they are enthusiastic and amazingly intelligent. However, I am also heartened by the fact that they have such a well developed awareness that they have to operate within a legal and human rights framework that supports our democratic values both here and abroad. Some people think that there
	might be an almost cavalier attitude towards human rights in the agencies. However, from my discussions with the people involved in operational matters—the people charged with doing this work—I can tell the House that it is hugely refreshing to see that they are almost self-policing when it comes to the legal framework within which they operate. That should give us all some security and assurance.
	I pay tribute to those in the services who have made the ultimate sacrifice. There are people in our services, whether on military operations abroad or in hostile circumstances, who have died while on duty serving the country. They cannot be acknowledged publicly—the services do their best, in what they can do, to acknowledge them privately—but it is important that we should pay tribute to those who have given their lives in the service of our country. We owe them a great debt.
	In the world of secret intelligence, when people are operating in the most dangerous and hostile areas of the world, difficult decisions will always need to be taken, which is why the work of the ISC in scrutinising how the agencies operate is vital if we are to retain public trust in the agencies’ work. The most controversial issues arise when difficult decisions have to be made. It is essential that, while protecting our secrets, our agents and our techniques, we can assure the public that our intelligence agencies operate within the rule of law. The ISC has an important responsibility not only to provide scrutiny, but to perform the essential role of reassuring the public.
	That is why we have begun to discuss having an occasional public evidence session. Clearly that cannot apply to the majority of our business, which has to be in secret because we must have that confidential relationship, but there is more to be done. In an age when information is everywhere and when the public are more sceptical about the work of authority in general, there is more to be done to reassure the public that the services are operating within the framework of the rule of law and within a robust human rights framework, too. That is why it is important that effective, independent and properly resourced oversight is available to us.
	We have had lots of speeches this evening and, between us, members of the Committee have managed to cover most of the ground, as ever. However, I want to raise a couple of things in the annual report with the Minister and ask him some questions that he might be able to answer in his winding-up speech. He will know that I have long been concerned about the security threat at the Olympics. That is not a partisan issue, because we are all worried about it. We need to ensure that we do everything that we can to protect the public at a time of heightened risk. We have been told that we need 100 extra agents and that it takes a year to recruit and train them. I would welcome an assurance that by the time we get to the Olympic games we will have in place the resources that were promised and that we need to provide that reassurance.
	I have to say to the Minister that the Government response to the issues that we raised about the Olympics in our annual report is a little obtuse. It says that the service will be able to
	“build further capacity and strengthen the resilience of its processes,”
	and that its response is
	“designed to be scalable…to maximise agility in meeting surge requirements, while continuing to respond to business-as-usual demands”.
	That sounds to me like something out of a corporate annual business report, so I would welcome a little more clarity—perhaps in plain English—about what the pressures are, what resources are in place and why the Government are reassured that the Security Service is able to manage at what will undoubtedly be a time of increased threat.
	I have raised TPIMs many times with the Minister, as has my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). I thought we had a very good Committee stage on the Terrorism Prevention and Investigation Measures Bill, with many more Members contributing than is usually the case, and the Minister was generous in dealing with the issues that we raised. I am afraid, however, that although he was generous, he has not managed entirely to reassure me. I still honestly believe that it is common sense simply to delay the implementation of the transition from control orders to TPIMs until the Olympic games have concluded. It is not a matter of the Government losing faith; it is not about backtracking; and it is not about moving away from the original policy, with which, incidentally, as the Minister knows, I do not agree. He seems intent on this policy, but to cope with the extra threat without adding extreme layers of risk into what is already a highly charged situation, he could simply say that the Bill will not come into force until October next year. That would at least get us past the Olympics. If he is not prepared to do that, will he tell us in his winding-up speech why he is not prepared to take that straightforward step?
	Another issue was discussed by the hon. Member for New Forest East, but not by other hon. Members. This is the issue of the Prevent review and the role of the Research, Information and Communications Unit, which is dealt with on pages 44 and 45 of our report. The Prevent review was supposed to be published in January this year, but it was not actually published until July. That was too late for us to be able to examine its impact, so it is an issue to which the Committee will return. The Home Secretary promised time for a parliamentary debate on the Prevent review, but it has not yet happened. Will the Minister tell us when that debate will take place?
	The key issue is to separate Prevent work, by putting it in the Home Office, from the integration work in the Department for Communities and Local Government. The integration strategy—again, long promised—has not yet materialised. It has been trailed in the press today, and if the press reports are correct, one proposal of the Secretary of State for Communities and Local Government is to start a British curry college. I am not quite sure how that fits with an integration strategy, but I am ready to be convinced about the benefits of pakoras, onion bhajis and goodness knows what else! Levity aside, that integration strategy is absolutely key if we are to do the vital work of ensuring that young people feel very much part of British society, so that they cannot be groomed, radicalised and drawn into that world, which, unfortunately, has happened all too often in the past.
	I tabled a series of parliamentary questions about the Prevent review, of which the Minister is aware, asking which groups the Government were going to work with, which previously funded groups will no longer be funded because they do not share our democratic values, how we will ensure that groups sign up to democratic values if we are going to work with them in future and what
	practical work will be done on the ground. I have to say with some regret to the Minister that the answers to my parliamentary questions were entirely unsatisfactory. I would go as far as to say, although not in an insulting way, that the answers were stonewalling. If the ISC occasionally cannot answer questions because of secrecy, the Minister seems to be rather expert at not answering my questions. I did not feel that the questions related to secret matters, so I ask the Minister to revisit my parliamentary questions and provide me with some answers.
	The hon. Member for New Forest East talked about the significant budget for the Research, Information and Communications Unit, but we have no way of knowing whether it is appropriate, whether it helps to achieve the objectives that it should or whether further evaluation is necessary. I entirely accept that evaluation of Prevent, RICU, counter-radicalisation and counter-narrative is really difficult. I struggled with these issues when I was the Secretary of State with responsibility for this area of policy, but it is essential that we work on evaluation and know how effective we are at steering young people away from extremism. We must minimise the number of people who, unfortunately, are going to find themselves in this territory. There is nothing more pressing for our country. Heaven forbid that we should have another attack. I was a Minister at the time of 7/7. I feel a great personal responsibility on this agenda. Heaven forbid that another event happens because we have not done enough work to be able to identify people early, to steer them away from extremism, to give them a real sense of British identity and to be part of our community. That is why I press the Minister so heavily on these issues.
	I think that the problem of detainees is one of the most significant with which we must deal. The Prime Minister has taken a number of actions: he has set up the Gibson inquiry; he has helped to secure a settlement in the Guantanamo Bay cases; he has issued consolidated guidance on the treatment of detainees; and he has drawn up the measures in the Green Paper. However, I feel that both public reassurance and the reputation and morale in the services are at stake.
	Last week, in what I considered to be a groundbreaking speech on secret intelligence, the Foreign Secretary said that
	“we also saw allegations of UK complicity in extraordinary rendition leading to torture. The very making of these allegations undermined Britain's standing in the world as a country that upholds international law and abhors torture. Torture is unacceptable in any circumstances. It is abhorrent, it is wrong, and Britain will never condone it.”
	I think that every single Member in the House today would support that sentiment. The Foreign Secretary also said:
	“As a nation we need to be an inspiring example of the values we hold dear and that we want to encourage others to take up.”
	In the past—not when I was a member of it—the Committee has taken evidence about the treatment of detainees and allegations of complicity by our services in the maltreatment of detainees by foreign intelligence agencies. I believe that such matters corrode public trust and internal morale if they are allowed to endure, which is why I think it important for Sir Peter Gibson’s inquiry to be as open and transparent as possible—commensurate, of course, with the protection of our national security.
	I want to hear from the Minister when we can get on with the inquiry. I know that there are problems involving police issues and witnesses, but delaying the start of the inquiry’s work and its reassurance of the public can only be damaging. I also know that some people are worried about the inquiry, because they want all the evidence to be published and to be open and transparent, which is a difficult issue. It is the same issue that arises in the justice and security Green Paper about how we should protect information from our allies when national security is at stake.
	We are faced with is an unenviable choice between completely open inquiries in which key material that would expose our secrets cannot be used and decisions must therefore be based on an incomplete understanding of the facts, and partly closed proceedings in which only members of the inquiry team, or a judge in a court case, have seen the secret material. Closed proceedings are, of course, unsatisfactory, but at least they ensure that decisions are based on all the relevant information. That is the dilemma that must be faced, and the choice that must be made. Do we want open proceedings in which judgments are made in ignorance of the facts, or are we prepared to allow limited, tightly controlled closed proceedings in which it is at least possible to obtain all the information before the person who makes the final judgment?
	I do not think that that dilemma can be resolved to the absolute satisfaction of all parties, so compromises will be necessary. That is the real world with which must we deal in relation to security agencies, secret intelligence and the national security of our country. It is always a matter of balancing the risks and making difficult decisions. However, at least in a democracy such as ours, it will be for our elected Parliament to consider some of those matters in future legislation, when there will be the opportunity for a wide-ranging public debate.
	In the case of al-Rawi in the Supreme Court, Lord Clarke said that he was not prepared to grant closed proceedings, and that those were matters properly for Parliament to resolve. We, too, need to deal with these issues. I want to hear from the Minister when we will have legislation if he proceeds with the proposals in the justice and security Green Paper. Will there be a separate Bill? Will it be a broad justice Bill? There is an urgent need, and an impetus, for such matters to be resolved.
	We have heard a great deal this evening about the Binyam Mohamed case and the control principle. That ground is well established, but it is difficult territory. I commend the Government on the Green Paper, because it takes a great deal of courage to tackle such issues head on. Inevitably, some “voices off” will accuse the Government of being authoritarian and illiberal, while others will claim that they are not protecting information sufficiently to reassure our allies. It is a no-win situation, but at least the Government have gripped it. I merely wish to add my weight and to say, “If we are going to tackle this, let us get on with making it happen.”
	We have a range of options. The option that the Government wish to pursue is that of closed proceedings. I well remember, as the Minister who dealt with the control orders legislation, how controversial closed proceedings and special advocates were at that time. That is a departure from our traditional legal system of open, transparent justice, where evidence is presented to
	the court, tested and cross-examined in front of a judge and a decision is then made. I do not think that we have found a better way of dealing with matters involving secret intelligence however, and although all of us would be reluctant to go down this path as it is not something we would want to do, I cannot see an alternative.
	I ask the Minister to consider not only closed material proceedings, but the possibility of the presumption of exclusion in certain classes of cases, as proposed in the public interest immunity option, or the assertion of state secrets—again, that would involve a rebuttable presumption that could be put before the courts. In framing the legislation, it is important that the courts understand what the mischief is that we are trying to deal with, which is exactly what they will look at in respect of statutory interpretation.
	I support all the Committee recommendations. I agree that we should look at operations retrospectively, as well as considering policy. The Home Secretary said that she is pondering whether the commissioner might look at the effectiveness of operational policy. My understanding is that the inspectors’ role is to look at compliance with policy and the law. Again, I ask the Minister to think very carefully about this, because the last thing we want is confusion between the role of parliamentary oversight in looking at operational policy and the role of independent oversight.
	When I have visited the services and met the men and women—there are both men and women—working on our behalf, I am acutely conscious of the need to develop all our staff so they can achieve their potential. I believe that there are currently too few women at senior levels in our services. I have raised that with the agencies. I do not say that every woman is empathetic or a good listener, but women have skills that are vital to our intelligence services. I am the only woman currently serving on the ISC, and the Chair knows that I am pursuing these issues. It is important that we draw on every bit of talent, knowledge, potential and skill in our services, which includes men and women working together. I ask the Minister to reinforce that message.
	I commend the report to the House.

Tobias Ellwood: It is a pleasure to follow the right hon. Member for Salford and Eccles (Hazel Blears). She speaks with compassion and conviction, and she articulates her points very well. She is an asset to the Committee, and it has also been a pleasure to work with her on other Committees.
	As the final Back-Bench speaker, I should consider what points are left to be made in what has been a very informative debate. It is important that the British public and Parliament have confidence in the agencies’ ability to keep us safe, and to do so within the framework of the law and our democratic values. I therefore add my congratulations to the Committee and its Chairman on the work they do in helping to realise those objectives.
	The Committee has now been in existence for 16 years, since the Intelligence Services Act 1994, and it is clear that greater transparency has been introduced year after year. The security services have, of course, been in existence for much longer than that, but it is also clear that the public remain largely unaware of what they really do. It has been left to romanticised fictional characters, from James Bond to George Smiley, to
	portray the role of our clandestine services, apart from when information has occasionally spilled out into the public domain, such as the revelations about the Cambridge spies and the break-up of the Soviet spy ring in the 1970s. Indeed, so well are our secrets kept that it was not until the right hon. Member for Blackburn (Mr Straw) became Home Secretary that he discovered the existence of his own MI5 file dating back to his days as a student radical. That shows how well our clandestine services can keep secrets.
	Our modern-day service dates back to 1909, when it was called the Secret Service Bureau, but intelligence monitoring, collection and interception dates back far further—all the way back to the 15th century. Thomas Cromwell ran secret agents in Europe on behalf of Henry VIII and the famous Sir Francis Walsingham, private secretary to Elizabeth I, developed expertise in secret interception and maintained a network of more than 50 agents abroad. For the sake of completion, we must not forget the masters of intelligence gathering: those in the Whips Office. The party enforcers have long developed that dark art of intelligence gathering and monitoring, not to mention a range of creative punishments lest Members drift astray.
	On a serious note, we live in turbulent times and there has been a focus on our secret intelligence services since 9/11. More demands have been placed on them, as our nation expects them to prevent attacks by recognising where they are coming from and intervening before they get out of hand. As I mentioned in an intervention, I believe that after 9/11 too much unchecked power fell into those hands, and the very standards that successive generations fought hard to create, defend and preserve slipped. As the Chairman of the Committee rightly pointed out, there is no criticism of the British intelligence services or their methods of gathering intelligence. We should be more focused on how we use that intelligence, how it was portrayed by the politicians and the consequences of the actions taken after that. Given Guantanamo Bay, rendition, water-boarding, the justification for the Iraq war, dodgy dossiers and so on, hon. Members will recognise that in the so-called “war on terror” we lost our way. I am very pleased that the Chilcot inquiry has finally got off the ground and will report soon. It will provide testament to what went wrong during the justification for going to war.
	As a nation, we need to be an inspiring example of the values that we hold dear and that we must encourage others to stand up for. Once damaged, our moral authority in the eyes of the world is very difficult to replenish, so I am very pleased that this Government are overhauling how the security services do business, are held accountable and marshal their resources in a way that serves this country’s overall objectives. Three themes have emerged today. The first is the importance of the strategic defence and security review in providing that strategic direction, which, sadly, was absent for so long under the previous Government. The second is that new guidance is in place so that the courts can be used more appropriately and the Justice and Security Green Paper aims to strengthen our legal arrangements involving cases that require Security Service comment. The third is, as my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) outlined passionately, the new era of openness and scrutiny that we now expect. I am pleased to see that powers will very much be coming to the Committee to allow it to continue that work. It
	seems strange that we can now talk about Sir John Sawers, the head of MI6, Iain Lobban, the director of GCHQ, and Jonathan Evans, the head of MI5. In the past, those names would have been limited to a letter or would not have be known by us at all.
	In the remaining minutes, I wish to discuss cyber-security, which I mentioned in an intervention. As the report suggests, this is a completely new dimension, which we have yet to master. It is constantly evolving and is introducing a complexity to security matters that we have not been able to appreciate before. It is also fuelling an explosion of new connections between Governments, economies and citizens. The use of cyber-world is overwhelmingly positive, allowing the transfusion of ideas, thoughts, economies and so on, but it is also a double-edged sword—there is a negative aspect to it. Aspects of the Arab spring have been attributed to the way in which Facebook has been used to communicate in a way that had not been allowed in the past. That of course is very positive, but the internet has been harnessed by terrorists, criminals and, in some cases, states to disrupt and attack. The question I pose to the Minister, which my right hon. and learned Friend mentioned in relation to cyber-security, concerns the number of agencies that have taken an interest in cyber-security. I believe that my right hon. and learned Friend talked about there being 18 units in all. That of course is very positive, because it simply means that every agency, organisation and Department recognises the need to understand and become an expert in this realm. Are we at a point at which there is the co-ordination we require, as illustrated on page 56 of the report, which lists the number of organisations with cyber-security interests?
	I also mentioned in my intervention the changes in our society. The generation growing up today is living in a very different world from the one in which I grew up. The computer I first came to terms with was the ZX81, which would probably be found in an antiques store or even a museum now. I hear some chuckles from Opposition Members, and they probably recognise that name. Nowadays, everybody has a computer or has a mobile phone or iPad on their person. We are entering the digital world of the future—it is already the world of today. The liberal way in which youngsters today exchange information quite freely means that we need to ask whether, when they graduate to adulthood and become responsible for credit cards and information in small, medium and large businesses, they will have the same level of caution as we apply in using such technology. We are cautious because we are uncertain of it, because of the generation of which we are part.
	There is also a concern about whether small and medium-sized businesses will have the intuition to recognise the importance of cyber-security. There is a worry that the financial crisis will mean that the last thing on any small business’s mind is the consideration of cyber-security and protecting their digital information. Of course, when we talk about cyber-security we have to remember that it is not just about terrorism but about criminality, too.
	The impact on our society of the internet and of the digital age is, I would argue, bigger than the invention of the wheel or more significant than the printing press, such is the effect on the world and our lives. If knowledge is power, the internet means power now has no boundaries. The ability to simplify our lives through online banking and shopping is positive, of course, but the internet can
	be terrifying because of the risk of identity theft or, indeed, sabotage, which could lead to disasters such as a head-on rail collision.
	If the Cabinet Office leads on cyber-security, we must then ask whether it—or another Department—should lead on educating businesses and the nation. If not, which Department should do that? It needs to be a priority for the reasons I have outlined. We have an opportunity now to harness such work to our economic benefit. We have an aerospace industry that is primed and ready to harness that capability. Can we now be the world leaders in providing protection in cyber-technology? Some of the recognised companies that we are dealing with, such as IBM and so on, are international operations—they are not British—but companies such as BAE Systems Detica and Logica are UK companies and when I spoke to them before the debate it was clear that they were concerned about university training. When we compare the university courses on cyber-technology, we see that only 15% of the content is consistent. That means that people are not sure and the universities are not in agreement about what needs to be taught in the future. There is an opportunity for leverage there.
	Finally, it is important to work with our allies, as the right hon. Member for Salford and Eccles stressed. The Foreign Secretary said last week:
	“Intelligence…is like a jigsaw…we…rarely have all the pieces”.
	The analysis of information and working with our partners enables us to piece together each snippet of information to create the fullest possible picture of the threats to our national security and to act against them. We cannot work in isolation on that; we must work with our allies, too. That means training our allies so that they can recognise and work to the same standards as we do, not just in the technology but in the moral standards I spoke about earlier. That allows us to develop links with parts of Governments in other countries and to build capacity and infrastructure support while strengthening our diplomatic and military relationships.
	In conclusion, our security services have the skills to assimilate information beyond the reach of everyday diplomacy, filling in the blanks in our understanding of our enemies. So much of their work is unseen and therefore receives little praise. They are our early warning system against those who plot to sabotage us, steal from us or kill us. It is difficult to find a country where the clandestine community performs so well under such scrutiny within the confines of democratic process. By and large, we sleep safe at night, oblivious to the many threats we face as they are dealt with by the service we never see.

Diana Johnson: I pay tribute to all those who work in the security and intelligence agencies for the important work they do in keeping us all safe. I also extend that tribute to the very important work that the Intelligence and Security Committee does in scrutinising those agencies. It is clear from this evening’s debate that the past and current members of the Committee have been very high calibre and senior parliamentarians. The right hon. and learned Member for North East Fife (Sir Menzies Campbell) said that they were fully independent and had experience
	and judgment, and that view was echoed by my right hon. Friends the Members for Knowsley (Mr Howarth) and for Salford and Eccles (Hazel Blears).
	The report is excellent and we have had a very good debate on its contents. The current Chair of the Committee, the right hon. and learned Member for Kensington (Sir Malcolm Rifkind), set out the key issues in a very accessible but detailed way at the outset. I should like to pay special tribute to my right hon. Friend the Member for Torfaen (Paul Murphy), who made such a contribution to the development of the Committee’s work as its Chair. He let us into a secret this evening about the one vote that took place when he was chairing the Committee about which mode of transport the Committee should use on a visit. I am sure that does not offend against the Official Secrets Act.
	The report covers the period from October 2010 to May 2011, and we have seen further developments since, including the Green Paper on justice and security. My hon. Friend the Member for Walsall North (Mr Winnick) made it clear that there had been a long fight to get the Committee established in the first place. It operates under the Intelligence Services Act 1994, so it is now 16 years old. The world has moved on considerably in those 16 years, but so has the Committee. The hon. Member for New Forest East (Dr Lewis) said that recognition of the need to make changes to the Committee was about formalising what it does already.
	The right hon. and learned Member for Kensington talked about the radical modernisation of the Committee and mentioned public hearings. My right hon. Friend the Member for Salford and Eccles also commented on the need to look at operational issues as part of the Committee’s remit. My right hon. Friend the Member for Torfaen drew on his experience to give some wise words about which of the proposed changes he supports. Recommendation JJ in the Committee’s report sets out in full the Committee’s concerns and the changes it would like to be implemented. The Home Secretary gave a positive response in her remarks to many of the proposed changes, including the recommendation about the Committee becoming a Committee of Parliament. We look forward to debates on all the recommendations and whether they will come to pass in the coming months.
	I want to touch on the issue that my right hon. Friend the shadow Home Secretary raised about who should chair the Committee, which provoked quite a lot of debate. The key issue is not about the person chairing the Committee being independent—there is nothing in that—but is more about the perception that the general public might have about an Opposition MP chairing such a Committee. The right hon. and learned Member for North East Fife made some very interesting points about the Prime Minister’s role in choosing or having some say in the selection of members in future.
	There are a few key issues that many Members have talked about this evening. The first such issue I should like to address is the spending review. It is clear from the settlement for this area that there is an 11.3% cut to the single intelligence account, and a number of concerned Members mentioned the effect of inflation. Because inflation is running at a much higher rate than was previously thought, that figure needs to be monitored. The Chair commented that the Committee recognised the need to be flexible in reacting to any significant changes in the threat when considering the budget allocation that has been made.
	The Government’s response was that they would reprioritise and make sure the National Security Council’s top requirements were given priority, with a reduction in the spend on lower priorities. It is clear that there may be unknown factors lurking around the corner. That should be kept under review. We must make sure that there is sufficient funding to maintain the security of the country. My right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) made a powerful point about that.
	It is interesting that the report identifies areas where savings could be made to meet the 11.3% cut, including more joint working and the possibility of a shared vetting procedure across all agencies. Other issues that should be examined include the use of consultants and internet and language specialists, and whether some of those could be shared across the services. The Chair of the Committee said there were already good examples of joint working.
	The right hon. Member for Carshalton and Wallington (Tom Brake) highlighted important issues relating to assets, the £1 million worth of assets that had gone missing, and the need to ensure that that does not happen in the future. It is interesting to note that the Committee is investigating the value for money of projects it has been concerned about.
	The Olympics have been mentioned by many hon. Members this evening. It is clear that the public are concerned about security during the Olympics. Over the past week we have seen much press coverage of the topic, including a parliamentary question about the use of surface-to-air missiles. In the press at the weekend there was mention of the deployment of snipers in helicopters. There was a report last week about the possibility of 500 FBI agents being brought over because the Americans were so worried about security, and the use of the Army to help protect the Olympics.
	The report recognises how important this issue is. The Home Secretary said that we were on track, but that is against the background of the policing cuts, which we know are front-loaded and can affect the policing capability at the Olympics, and the knock-on effect on other security services. The hon. Member for New Forest East suggested that we put ourselves in the shoes of someone who wants to do harm. It may be that some other area is threatened, rather than the Olympics. This all has to be considered. I hope the Minister will be able to offer further reassurance on the matter.
	On terrorism prevention and investigation measures, my right hon. Friends the Members for Salford and Eccles and for Wythenshawe and Sale East made a powerful case for the Minister to consider delaying the introduction of TPIMs until after the Olympics in order to offer a further layer of protection. I hope the Minister will reply to the queries about whether all the officers are trained and resourced, ready for the introduction of TPIMs if that happens in the next few weeks.
	Cyber-security was mentioned by many hon. Members. We welcome the fact that it has been recognised as a tier 1 national security risk, and the £600 million of extra resources are welcome. I listened to what the Chair said about the number of bodies, law enforcement agencies and Government Departments that are involved in this area. Although the hon. Member for Bournemouth East (Mr Ellwood) argued that it was an advantage that
	so many organisations were involved, there are questions about whether the response is as co-ordinated as it could be.
	The control principle was talked about at length, and the Committee Chair gave a helpful explanation of why it is so important and the potential way forward, now set out in the Green Paper, for using the closed material procedures and the special advocate route. What my right hon. Friend the Member for Knowsley and the right hon. and learned Member for North East Fife said about turning off the tap of information and whether that has already happened was very telling, and I think that that will be debated further.
	Finally, I want to mention BBC Monitoring. I hope that the Government will consider the recommendations set out in recommendation EE of the report, which asks them to look again at funding in the period leading up to the transfer to the licence fee funding for that important area. We heard at length about BBC Monitoring and how important getting that open-source information is. I look forward to the Minister’s responses to all those points.

James Brokenshire: We have had an important and wide-ranging debate that has illustrated how important it is that the public should be confident that the Government’s national security work is being robustly scrutinised. Last week the Foreign Secretary said:
	“I believe it is vital that the British public and Parliament have confidence in the Agencies’ ability to keep us safe and to do so within the framework of the law; and that they also have confidence in government using this capability wisely, and in accordance with our democratic values and principles of domestic and international law.”
	That comment sums up well the Committee’s challenges and the themes that ran through this evening’s debate. I am grateful to hon. Members on both sides of the House for raising a number of pertinent points. We heard 16 speeches, and the debate has been considered and well informed. I fear that in the eight or so minutes available to me I will not be able to do justice to the contributions we have heard.
	Before I address those points, let me first thank my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind), the Committee’s Chair, for the work he and his Committee have undertaken over the past year. The Committee and its staff continue to adopt a constructive and professional approach, for which the Government are grateful. It is vital that we have a strong framework for overseeing the work of the security and intelligence agencies. As my right hon. Friend the Home Secretary has said, the quality of the ISC’s annual report underlines the unique and valuable role it plays in this framework.
	Several of the contributions we have heard this evening have focused on the justice and security Green Paper and the proposals it outlines to ensure that justice can be done in the full range of civil proceedings by allowing the courts to take full and fair account of all the relevant information, even when some of it is too sensitive to be disclosed publicly. The overall aim is to allow cases involving national security to be heard fairly, fully and safely in our courts, and I think that that sense of
	safety underpinned a number of the contributions we heard this evening. This will allow sensitive material to be considered in court proceedings without the risk of vital intelligence or essential international intelligence-sharing relationships being compromised.
	Sensitive material is essential for UK national security. It is used to prevent terrorist attacks, disrupt serious crime networks and make the case for executive actions such as deportation and asset freezing. Closed material procedures are the central provision in the Green Paper. Extending their availability across all civil judicial proceedings will provide a framework that enables the courts to consider material that is too sensitive to be disclosed in open court but that protects the fundamental elements that make up a fair trial and UK national security. We welcome the Committee’s support for the proposals.
	The other aspect of the Green Paper that has been the focus of much of today’s debate is the proposal to strengthen, clarify and modernise the arrangements for overseeing the work of the security and intelligence agencies and the wider intelligence community. The proposals are designed to ensure that oversight arrangements are as effective and credible as possible and to provide reassurance to Parliament and the public that the agencies operate in a proper and legal manner.
	I am grateful to the ISC for the very active and constructive role that it has played in developing proposals for its reform. The Government and the Committee agree on the right approach to the vast majority of those proposals, including formalising the role of the ISC with regard to oversight of the wider intelligence community, making it a statutory Committee of Parliament and allowing it to report to Parliament as well as to the Prime Minister. The ISC would also be given the power to require information from the agencies.
	As my right hon. Friend the Home Secretary has said, however, although the Green Paper proposes that we consider the extent to which the ISC might in future oversee the operational activity of the agencies, no decisions have yet been made in that regard. Before making any decisions, we would need to understand the consequences of creating such a broad power, including the impact on the operational effectiveness of the agencies and on the Foreign and Home Secretaries’ own responsibilities for them.
	A number of points have been made about the agencies’ resources and the ability to respond to threats. In addition to the real and serious threat from international terrorism, particularly from al-Qaeda and its affiliates, we continue to face threats from residual terrorist groups linked to Northern Ireland, as well as from cyber-attack and from traditional espionage—a point very effectively made by my hon. Friend the Member for New Forest East (Dr Lewis).
	I welcome the ISC’s conclusion that the agencies have been given a fair settlement in the most recent spending review, which will allow them to continue their essential work of keeping us all safe, but of course they are not immune from the pressures of the wider economic climate, and delivering more support or back-office
	functions together will ensure that the agencies can play their part in making savings while prioritising resources to support the front line.

Martin Horwood: Will the Minister give way?

James Brokenshire: I am afraid that I will not, because I have three minutes left in which to get through a range of other points. I do apologise to my hon. Friend.
	Let me make it clear: there is no question of allowing our national security to be diminished in order to make savings. The agencies have always prioritised their resources to meet the highest threats to our national security, and they will continue to do so. There is no clearer example of that than the Olympics, which throw up a number of security challenges, but agility and flexibility are core and established strengths of the British intelligence community. The agencies continue to enhance their capacity in preparation for the games, and their plans for meeting the additional challenges of London 2012 are mature and remain on track, including in relation to the recruitment of additional personnel.
	A number of points have been made about cyber-security, and the Government welcome the ISC’s acknowledgement of the real and increasing risk to the UK’s national security from cyber-attack. It is one of the highest priority risks that we face, and the Government have allocated—I know that many Members recognise this—an additional £650 million of funding over four years to enhance the response to threats from cyberspace through a transformative national cyber-security programme. Much of that money will fund activity by the agencies, but we have sought to provide clear accountability on cyber-security through the Office of Cyber Security and Information Assurance and the role that my right hon. Friend the Minister for the Cabinet Office and Paymaster General plays in providing such oversight, while recognising the role that other Ministers and Departments have to play in that important agenda.
	As well as providing resources, we are committed to providing the agencies with the powers that they need. That is why the Government have introduced the Terrorism Prevention and Investigation Measures Bill, combined with new resources for the police and security services to replace the current control orders regime, which is neither perfect nor entirely effective. TPIMs will provide robust and effective powers for dealing with the risks posed by suspected terrorists whom we can neither prosecute nor deport, and they are part of a wider package of work to ensure that we have the most appropriate and effective powers to address the terrorist threats. Arrangements will be in place to manage the transition from control orders to TPIMs effectively.
	In conclusion, I pay tribute to the security and intelligence agencies for the enormous contribution that they make in ensuring that the British public are kept safe and properly protected. We all owe them a debt of gratitude for the fundamental and indispensable role that they play in keeping our nation safe.
	Question put and agreed to.
	Resolved,
	That this House has considered the matter of the 2010-11 Annual Report from the Intelligence and Security Committee (Cm 8114).

MENTAL HEALTH CARE

Motion made, and Question proposed, That this House do now adjourn.—(Stephen  Crabb .)

Charles Walker: Thank you for calling me to initiate tonight’s Adjournment debate, Mr Speaker. May I alert the Minister who is responding this evening to an excellent report published today by Mind entitled, “Listening to Experience—An Independent Inquiry into Acute and Crisis Mental Healthcare”? That paper comprises more than 350 interviews with people who have experience of acute and crisis mental health care. I say to the Minister—although he probably knows this—that the report makes for very difficult reading. However, there is also room for huge optimism.
	I am delighted to be joined tonight by the hon. Member for Ashfield (Gloria De Piero) and my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), who will be making brief contributions. I have also given permission for a few of my chosen and near colleagues to make brief interventions because I know how much the issue matters to them.
	We need a new approach to the provision of mental health care in this country. Provision should be based on compassion, understanding and respect. That is what comes out of the Mind report and the 350 voices it contains. It should not be a punishment to be mentally ill, but too often it is. People who suffer from mental illness feel hugely excluded from mainstream society, and we need to approach them in a compassionate way. We need to reach out to them and draw them near, not push them away.

James Morris: My hon. Friend is making a powerful case. The report is shocking in many ways. Does he agree that, if we are to develop a compassionate model of mental health care, we should focus on providing talking therapies more extensively to those people who come into the acute and crisis environment, so that they can be seriously helped with the conditions they present?

Charles Walker: My hon. Friend makes a fantastic point and is a fantastic attendee of the all-party group on mental health. He has a great interest in this area and I will come on to answer his point directly in a few moments.
	Over the past 30 years, we have made fabulous progress in moving away from the use of asylums, although we have had problems in doing that. We have talked about care in the community but, too often, the community has not been there to provide that care. We must continue to address that. In closing the asylums, we must remember that there is still a need for accommodation when people are in severe crisis. I do not like to talk about beds or hospital wards, but we do need accommodation. Sometimes, people are so ill that they need to be hospitalised and looked after, but in a caring environment.
	I am concerned that, with the closure of small acute wards, we are moving towards having much larger hospital environments. Some of those are, without doubt, excellent. However, as the report identifies, some of them have too many of the characteristics of past asylums. As I said, being ill should not be a punishment. It concerns me greatly to read of people going to institutions where
	they fear for themselves and are frightened daily. How can someone start to recover from a mental health crisis when they are terrified every day in their environment? Many of the report’s respondents said that institutions were so terrifying that staff seemed to spend most of their time trying to stop nasty things from happening. We must get away from that. We have made progress, but we are not doing so at a fast enough pace.
	Let me move away from discussing hospitals. Sometimes people need to leave their home. Therefore, we need settings that can take people out of their home, but that are not traditional mental health hospitals. In the report, I came across two fantastic initiatives. I knew about one because it is being pioneered in Hertfordshire, but another one I did not know about: crisis housing. That means that, when someone is at home and having a crisis, they do not have to go to hospital. They recognise that they are having a crisis, as do the people who work with them, and they can be sent to a home where they can go for just a few hours—four, five or six—to talk through their concerns with people who can understand what they are going through because, often, they have experienced mental illness problems themselves, so they are talking to their peers. Alternatively, they can spend up to three or four days there to get through the period of acute crisis, so that their equilibrium is coming back and they may be able to go back home and face the world again. Crisis housing sounds like a fantastic innovation, because we have to get away from the idea that when someone is terribly ill the only place for them to be is in a traditional mental health hospital. They may need a bed, but it does not have to be in a hospital.
	The other thing that has caught my attention, and is being pioneered in Hertfordshire, is the idea of host families. This is a fantastic initiative that people have been developing in France and that Hertfordshire is leading the way on in this country. If someone is not really up to being at home with their family or looking after themselves, they need some extra support. There are families out there who will take them into their home and allow them to become part of their everyday life. Those people may well, and probably do, have experience of dealing with mental health illness themselves. They may be in recovery, they may have recovered, or they may have a child, a brother or sister who has been in these very dark places, so they understand and know what their house guest is going through. This is a fabulous way of providing support. It can last from three weeks to 12 weeks, and it is there to make these people feel part of a working, functioning family community. They have responsibilities and chores, but they are given the support and love that they need to make progress.
	However, those solutions may not be right for everyone, and many people will, on occasion, need to be hospitalised. The report identifies that many tens of thousands of people each year go into a hospital setting. I hope that we can reduce that overall number. Nevertheless, we need accommodation to look after them. As I said, too much of the small traditional accommodation has been shut down. That has been positioned as an unalloyed good thing: “Hooray, we’ve got rid of mental health beds; hooray, we don’t need them any more; hooray, the community can pick up all these people.” In fact, the community is not always in a position to pick them up. Crisis helplines that are meant to be running for 24 hours a day often run only for part of the day, and that is
	simply not good enough. A mental health crisis does not happen between 9 am and 5 pm; it is just as likely to happen between 9 pm and 5 am. We have to accept that the community is not always there for those people. Now that we have closed these beds, which were often in very small wards very close to people’s families, too often people who are committed into an acute environment can be sent up to 200 miles away from their home and from the people who care for them and can nurture them and provide them with support. To me, that is not progress.
	We are now moving towards having larger mental health units. As I have said, some of those are very good but, as the report identifies, many are not. The threshold for being admitted to acute care is now so very high, because there are so few beds to accommodate people, that only the most ill people get into hospital. I have to say that, too often, their experience is pretty frightening and pretty unpleasant. I am not calling for less accommodation, but I am calling for us to do things differently, so that when we, as a society and as communities, are put in charge of people with a severe mental health problem, we go out and embrace them. We do not put them in a frightening environment where the doors are locked, where they are restrained, often face down, where they are terrified, and where they feel under pressure and in danger of being assaulted; we create environments where they can go and get well. With the mentally ill, we are not mending bones. I do not want to stick people in bed for 20 hours a day and put their leg in a brace. We are not doing that; we are not in that business. What we are in the business of doing is putting people in an environment where they can get well; where, as my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) said, they can talk through their problems; where they can come to terms with their problems; where they can speak to people who have been where they have been, then recovered and gone on. That is the kind of environment that we need to create in the acute setting.
	That calls for a radical approach. Perhaps we have to stop talking about hospitals and beds, and instead start talking about accommodation and wellness centres, where people can go to get well and where they feel relaxed, comfortable and safe so that they can focus on themselves and their own mental health. When people have a mental health crisis, all too often they are simply terrified and feel that the world is against them. If somebody who is feeling like that is put in one of these institutions, I am sure that it does their mental health no good at all.

Nigel Adams: What is my hon. Friend’s experience of youngsters who have to go to such hospitals and who find themselves in mixed-age wards?

Charles Walker: That is a very important area. Great strides are being made to end mixed-sex and mixed-age wards. How terrifying it must be for a young person to be in such an environment for the first time with people of all ages, with all types of experiences, illnesses and conditions. That is not acceptable, particularly if that young person is 200 miles or more from their family. That is not a way to treat people.
	As I have said, being mentally ill is not a crime. We need to reach out and embrace these people, and we need to hold them close. We need to create environments where they can get better and focus on themselves. Talking therapies have a huge part to play in that. This is a fabulous report because it focuses on the areas of weakness in the current system. That provides the Government and Back Benchers with an opportunity to work together to get it right. I will now sit down and allow the hon. Member for Ashfield to join in.

Gloria De Piero: I thank the hon. Member for Broxbourne (Mr Walker) for allowing me to contribute to this debate. I also congratulate Mind on the work that it has done. Its report today reveals some harsh realities about how we deal with mental health in this country.
	I have learned a lot about mental health care, or the lack of it, in the short time that I have been the MP for Ashfield. I have also learned about mental health through my own experiences because a family member has struggled with his battles. I will talk a little about that later.
	It was not long after I became the MP for Ashfield that the Rokerfield day care centre was threatened with closure. I spoke to its users. One man told me that the day care centre was his family, that the other users were his siblings and that the staff were his parents. A woman told me that she would not be here if Rokerfield had not been there for her. I hope to goodness that she is still with us. Sadly, Rokerfield and many day care centres like it are no more.
	Something else that I have learned about recently through this job is the serious shortage of beds in psychiatric wards and the struggle to get emergency treatment. I sat open-mouthed in a meeting the other week as I was told that a shortage of beds meant that patients who were seriously ill and needed to be admitted immediately sometimes had to be taken miles away. The process was explained to me. If there is no bed locally, they start making calls. With each call, the bed gets further away. Before they know it, they are talking about a bed 100 miles away. When I heard that, I felt sick.
	I will briefly explain why that made me feel sick. A close relative of mine had many spells in a psychiatric ward. I made many visits to the ward. Each time was a trauma for my relative and for the family. I never once considered that he could have been taken miles away. The two bus rides and the long walk up the hill, sometimes in the winter months, were distressing enough for me. People do it for peace of mind and to show that their relative is loved. I have heard harrowing tales from Mind about patients who have been transferred from their local area by ambulance or police car because there were not enough local beds.
	I will end by echoing the call by the inquiry for
	“a culture of service and hospitality”.
	I thank Mind for its work. The Minister has responded to the report by saying that he will work with Mind to improve services. We will keep him to his word.

Andrew Jones: I thank my hon. Friend the Member for Broxbourne (Mr Walker) for so generously allowing me time in the
	Adjournment debate that he has secured. He and I have spoken about mental health provision several times before, although not, I believe, in the Chamber. We have spoken particularly about our concern that mental health provision is a Cinderella service in the NHS.
	I wish to highlight an issue of access in my constituency, which is the closure of the Hawthorn day unit in Harrogate. When that happened, I had a meeting with the users of the unit and their carers. It was emotional and powerful meeting—one of the most powerful that I have attended since starting as an MP. The users, who had no obligation to attend, spoke openly and powerfully of their experiences and the struggles they were facing, and they were brave to do so.
	The unit that closed provided a safe haven for those who really needed somewhere secure, because those facing mental health issues still face some stigma and discrimination in this country. It also helped by providing users with support to ensure that they took their medication, and it offered them the compassion and respect that my hon. Friend talked about. I have been in regular contact with the users since the unit closed, and I am very pleased that this week, we have secured a meeting between the users and the chief executive of the NHS foundation trust, which will take place in my office in about three weeks. I am hopeful that we will see the unit reopened.
	I close by congratulating my hon. Friend on all he does in highlighting mental health issues around the country, and on speaking so passionately and with such determination and eloquence this evening. I also say to the Minister that I read the publication “No health without mental health”, which was published in February, and was very encouraged by it. I thought it represented great progress.

Paul Burstow: I start by congratulating my hon. Friend the Member for Broxbourne (Mr Walker) on securing the debate and on pursuing this issue through the all-party group on mental health and other channels for a considerable time. His good fortune in securing the debate tonight is particularly timely given the publication of Mind’s report this morning. I congratulate him doubly on that successful coalition of events that have led to the debate.
	I, too, have had the opportunity to study the report, “Listening to Experience”, published by Mind, and I certainly share many of the sentiments that have been expressed in this brief debate. The report undoubtedly shines a spotlight on what is good about our acute and crisis mental health services, what is unacceptable, what is bad and what we can do to make them much better. It brings together the results of an independent inquiry, as we have heard, and it is fundamentally about ensuring that we listen to voices that are all too often overlooked and ignored.
	I welcome the report. It is challenging, and some of the unacceptable practice that it describes is frankly harrowing. Many of its important conclusions reflect the aims and ambitions of our cross-Government mental health strategy, “No health without mental health”. More than that, it reinforces why it is right that our broader health and social care reform agenda focuses
	on patients being treated in a way that respects their dignity, protects their human rights and promotes flexible and creative commissioning solutions that are tailored to meet individual and local needs. The key is ensuring that services are genuinely personalised.
	The provision of safe, modern, effective mental health services that offer patients real choice is, and remains, a Government priority. We expect the treatment and care of patients to be provided in the most appropriate therapeutic environment for them. My hon. Friend rightly referred to the concern expressed in the report that acute beds are not always available when needed. The hon. Member for Ashfield (Gloria De Piero) spoke about her own experience and her concerns about the journeys that some people have to make to find facilities, which is clearly unacceptable.
	I want to make it absolutely clear that commissioners and providers have a responsibility to ensure that acute beds are available for those who need them. They should also ensure that the needs and wishes of patients, families and carers are not only sought but taken into account when decisions are made about community or hospital-based treatment. Distance and journey times are very serious issues that need to be properly taken into account in those commissioning decisions.
	The quality, innovation, productivity and prevention programme, which is sometimes known as the Nicholson challenge, has targeted both reductions in bed days and—I stress—out-of-area admissions. Through a more effective acute care pathway, we can expect to achieve better patient experience of care, which means care that better reflects patient preferences, including being cared for at home if possible. That contributes to a more productive use of NHS resources to ensure that we drive up quality.
	Specialised mental health community teams—crisis resolution home treatment, assertive outreach and early intervention in psychosis—provide care to service users and families in community settings. The crisis resolution home team performs a key role in supporting people at home, which often averts the need for an in-patient stay, acts as a gatekeeper for all those requiring access to in-patient services or other emergency care and supports early discharge, when appropriate.
	The team is part of an integrated acute care system. It is affected by, and has an effect on, that system and beyond, especially the in-patient service and day hospital and community mental health teams. For example, patients with early onset psychosis benefit from early intervention services, and assertive outreach engages with severe and persistent mental disorder such as schizophrenia. That shared approach in system delivery is already beginning to show results, because 10,300 new patients with early diagnosis of psychosis were engaged with early intervention in psychosis services this year, which is the highest ever recorded figure. Overall investment in key mental health teams has also increased. In the last year, crisis resolution home treatment teams carried out 131,450 home treatment episodes for 106,790 patients who would otherwise have been admitted to hospital, an increase of 3.2% over the previous year.
	I do not want my remarks in response to the important debate that my hon. Friend the Member for Broxbourne has secured to suggest that the Government are complacent. Mental health is a priority for us. The strategy that I mentioned earlier, and not least the spending review
	decisions that we made last year, make clear our commitment, especially as regards improving access to talking therapists for people with severe mental illness. However, there is always room to improve, and there is a need to listen to, understand and act on the experience of patients.
	Mind’s report helpfully highlights four key areas: humanity, commissioning for people’s needs, choice and control, and reducing the medical emphasis in acute care, which is very much like the well-being concept that my hon. Friend has discussed. In mental health services, it is vital to balance patient autonomy with patient safety, which is often a source of debate in the Chamber. We need to ensure that that is done in an appropriate way, but it can be a challenging balance to strike. However, the solution to the problem does not lie with heavy-handed or coercive approaches. A wealth of research, guidance and good practice, much of which is cited in Mind’s report, offers practical strategies that can contribute much to ensuring that patient care is conducted in the humane, caring and respectful fashion described by my hon. Friend, envisaged in Mind’s report and espoused in the Government’s vision for mental health services.
	The Mental Health Act 2007 code of practice is clear on the need to seek all alternative measures before adopting control and restraint or seclusion procedures. Restraint should be the last resort, never the practice of first choice. The code also emphasises the importance of providing support to patients after using control and restraint, seclusion or long-term segregation, and of reviewing such incidents to enable staff to learn from them.
	The Mind report rightly draws attention to the importance of ensuring services meet the needs of black and minority ethnic communities. The Government’s mental health strategy acknowledges the lower well-being and higher rates of mental health problems that some BME groups suffer. The strategy is explicit on ensuring that health promotion and ill-health prevention approaches are targeted at high-risk groups, which means that programmes must be delivered in such a way that they are accessible to families from BME groups. Such approaches will lead to a narrowing of the health inequality gap.
	There is no doubt that good data play a critical part in driving improvement—the report highlights that—which is why the mental health minimum dataset already has a good level of information on the ethnicity of patients, and why the annual mental health bulletin includes rates of access to services by ethnic groups and describes the ethnic profile of people spending time in hospital and being detained.
	We will build on those measures. The mental health minimum dataset will go further, because for the first time it will be possible to analyse the full patient pathway, showing what happens to different groups of people before and after hospitalisation. This dataset has been identified as the single source for national statistics about the use of the Mental Health Act in the future, and the NHS information centre will launch a consultation next spring to determine exactly what information will be useful—I hope that hon. Members and others following the debate will take the opportunity to feed into that.
	The ability to compare and demonstrate differences between localities is an important way of driving improvement in services.

Julian Lewis: rose—

Paul Burstow: I can see my hon. Friend waving at me. I give way to him.

Julian Lewis: I am most grateful to the Minister. I want to put it on the record that since our last exchange on this subject on 10 November more data have come from the Hampshire trust, which intends to close more than one third of its acute in-patient beds, confirming that although only a minority of patients admitted to acute beds were detained patients, they stayed for longer, and that at any one time about half the beds, if not more, were occupied by detained patients. Does the Minister agree that if excessive numbers of beds are closed, the opportunity for a non-detained patient to find a bed will be disproportionately reduced?

Paul Burstow: I certainly agree that we need to look carefully at the data. My hon. Friend was right in his Adjournment debate on 10 November to highlight these issues and potential discrepancies, and I shall certainly take a close look at the data to which he has referred.
	I am anxious to ensure that Mind and other key stakeholders play a part in identifying how the information that I have referred to can best be analysed and presented. As I have said, those data will be particularly useful in supporting commissioners in developing the kind of flexible and creative commissioning solutions that Mind and my hon. Friend the Member for Broxbourne have described so well.
	The drive to improve the quality of services and reduce inequalities lies at the heart of our commissioning reforms. For the first time, the Secretary of State for Health, the NHS Commissioning Board and clinical commissioning groups will be under a legal duty to have regard to health inequalities in both access to and outcomes from health care. This legal duty will hardwire reducing health inequalities into the system. It not only obliges the Secretary of State to act, but obliges them to demonstrate that they did so and with what result. That is a powerful incentive for change.
	Mind rightly emphasised the importance of choice, which I strongly endorse. That is already being demonstrated through several initiatives, including the improving access to psychological therapies programme for children and adolescents and for adults, the extension of the personal health budgets programme for people with mental health problems to increase choice and control and the development of adult and children mental health tariffs. We believe that choice of consultant or other professional-led teams should extend to mental health to achieve the parity of esteem expected by the mental health strategy, and we will work with key stakeholders to develop the proposals and look at ways of implementing our plans.
	We recognise the benefits that mental health patients can receive from support and mentoring from peers, which was touched on in this debate, as well as the contribution from things such as crisis housing. To that end, I am working with colleagues on the ministerial working group on mental health to make these more widespread.
	In conclusion, I thank my hon. Friend and others who have intervened and spoken briefly in this debate. I shall write to my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) to pick up on his particular point. I very much welcome Mind’s report for its clarity and for the useful contribution that it makes to our shared aim of improving acute and crisis services, and I shall meet it to discuss its report and how we can take its recommendations forward in delivering the Government’s mental health strategy. The Government remain committed to achieving their overarching goal
	of better mental health outcomes for everyone. Our strategy sets out what everyone needs to do to realise that goal, and by working together we can make a long-lasting difference to the quality of life of people with mental health needs.
	Question put and agreed to.
	House adjourned.